1.5.7 Process Negative Cash Dividend

This topic explains the steps to process negative cash dividend in the Fund Dividend Detail screen.

If the EPU for the dividend is captured as negative value then the system will calculate the dividend amount as negative.

While processing the dividend payment if system finds out the negative payment amount, then system will generate a redemption transaction with the transaction amount same as the negative dividend amount. For instance, if the dividend amount is -1000 in USD, then the transaction amount is 1000 in USD.

The redemption transaction will have the following details:

Transaction Date = Dividend Payment Date

Price Date = Dividend Payment Date

Dealing Date = Dividend Payment Date

Payment Mode = For Kernel only Money transfer will be supported

Transaction Mode = Amount

Transaction Intermediary = Default Unit holder Intermediary

To Account = Fund bank Account (in FBC)

Transaction Type of the transaction will be Normal Redemption which is 03. The Communication mode will be defaulted to Direct.

Ref Type = NR (Negative Reinvestment)

Transaction Additional Information will be the default values.

If the unit holder Income distribution setup is Full Reinvestment then the system will generate the redemption, even if the reinvestment amount is negative. The system will treat the redemption transaction generated on account of the negative dividend in the same manner like a normal redemption transaction. CGT calculation for a UH EUSD will also be in the same manner as a normal redemption transaction.

Negative Dividend will take preference over UH IDS maintenance or Fund preference. This means that even if fund preference or UH IDS is maintained for a fund, the system will consider negative dividend instead of UH IDs maintenance or fund preference maintenance and a compulsory redemption will take place.

For MMF and CMMF funds, the negative dividend is applicable only as interim dividend and not as regular dividend.

The system will reverse the dividend reinvestment transaction for dividend reversals and post a new transaction in case of Dividend Amendment. While processing UH Dividend amendment the system will consider negative dividend.