What are reverted transactions?
A reverted transaction is a reversal or adjustment of a previously executed transaction. In order to bring the accounting into line with the interest paid on U.S. securities, the superior depositories make repayments. First, they cancel the previous payments and taxes (this is called “reverted”), and then make new dividend and tax payments.
Such transactions occur in the following cases:
- Correction of errors in dividend or tax calculations. The issuer may have initially declared an incorrect dividend amount per share or withheld tax at an incorrect rate.
- Recalculation of payments initiated by share issuers or depositories (e.g. international ones, such as DTC, or local ones). They may revise the terms or adjust the dividend payout data in case of errors or changes in corporate policy.
- Adaptation of data to changes related to the tax requirements or revision of payment rules. If the tax rate is revised in the issuer’s country, this may affect the amount of withholdings or tax refunds.
How to check the transactions:
- Generate a report on cash flows in Excel form for the required period.
- Filter out transactions by the required security to find all transactions on dividends and taxes.
- In the report, you will see 3 transactions: write-off of previously paid dividends, adjustment of paid taxes and accrual of new dividend amounts taking into account the recalculation.