Security Class Management

Overview

Security Class Management helps you categorise and manage different types of securities or ownership interests within your organisation.

With this feature, you can:

  • Create and configure multiple security classes to represent different equity instruments (ordinary shares, options, preference shares, units, etc.)

  • Track security holdings and balances across all investor accounts for each security class

  • Execute holding transactions (adjustments, transfers, conversions) while maintaining accurate records

This is particularly useful for organisations with complex capital structures, enabling you to maintain compliance-ready records and streamline shareholder management processes.

Definitions

Before you begin, here are some key terms used in this article:

Security Class Type

The category of security instrument (e.g., Ordinary Shares, Options, Preference Shares). Each type has specific characteristics like voting rights, dividend entitlements, and dilution impact.

Dilution Status

Indicates whether the security class affects share dilution calculations. Can be Dilutive (increases total shares when exercised), Non-Dilutive (standard equity), or Not Applicable (e.g., units in trusts).

Working Class

A designation that marks the primary security class used for standard transactions and reporting within your organisation.

ISIN

International Securities Identification Number - a 12-character code required for listed securities and cross-border tracking.

Investor Wallet

The online portal where investors can view their holdings, transaction history, and statements if enabled for their security class.

Prerequisites

Make sure you have:

  • Organisation Admin or Editor permission

  • Organisation type configured (Company, Trust, Cooperative, etc.)

  • Active subscription (if billing is enabled)

  • Understanding of your organisation's capital structure requirements

Steps

Creating a New Security Class

  1. Navigate to Security Classes from the main menu

  2. Click Create new security class

  1. Select the appropriate Security Class Type based on your organisation:

    • Companies: Ordinary Shares, Preference Shares, Options, Performance Rights, Convertible Notes

    • Trusts: Units, REIT Units, Beneficial Interests

    • Cooperatives: Cooperative Shares, CCUs, Rebate Shares

  2. Configure core settings:

    • Code: Unique identifier (max 20 characters for unlisted, max 5 for listed)

    • Name: Descriptive name (max 70 characters)

    • Status: Set to Active or Inactive

    • Listing Status: Choose Listed or Unlisted

  3. Set precision and features:

    • Number of Decimals: 0-20 decimal places for holdings precision

    • Working Class: Toggle if this should be the default class

    • Investor Wallet: Enable/Disable investor portal access

  4. Configure advanced settings (if applicable):

    • ISIN: 12-character international identifier (required for listed)

    • Exercise Price and Expiry Date (for Options/Warrants)

    • Coupon Rate (for Convertible Notes)

    • Dilution Status Override: Override default dilution classification

  5. Set up Dividend Reinvestment Plan (optional):

    • Enable Reinvestment Plan: Allow automatic dividend reinvestment

    • Default Participation: Set new investors to Full or None participation

  6. Review all settings and click Create security class

Managing Existing Security Classes

  1. From the Security Classes list, locate your target class

  2. View key statistics:

    • Number of Securities: Total securities on issue

    • Number of Investors: Count of holders

    • Status Badges: Listing, Wallet, and DRP status

  3. Use the dropdown menu for actions:

    • View Details: See comprehensive statistics

    • Edit Security Class: Modify configuration

    • Make New Transaction: Create adjustment, transfer, or conversion

Executing Transactions

  1. Click Make a transaction on any active security class card

  2. Select transaction type:

    1. Adjustment: Manually increase/decrease holder balances

      • Use for: Share cancellations, bonus issues, corrections

    2. Transfer: Move securities between investor accounts

      • Use for: Ownership changes, gifts, estate distributions

    3. Conversion: Convert holdings from one class to another

      • Use for: Option exercises, class conversions, rights issues

  3. Complete the required transaction details:

    • Target investor(s)

    • Quantity and effective date

    • Transaction reason/reference

  4. Review and confirm the transaction

Tips and Best Practices

Naming and Code Strategy

  • Use meaningful codes: ORD for Ordinary Shares, ESOP-2024 for employee options

  • Listed securities: Keep codes to 5 characters maximum for CHESS compatibility

  • Consistent naming: Establish patterns like PREF-A, PREF-B for series

Decimal Precision Planning

  • Start appropriately: Most equity uses 0 decimals

  • Consider use cases: Trust units often need higher precision than company shares

Security Configuration

  • Working Class: Security classes created temporarily for calculation purposes will be flagged as "Working Class" to distinguish them from permanent classes.

  • Portal privacy: Only enable Investor Wallet for classes where shareholders should have self-service access

Transaction Management

  • Regular reconciliation: Cross-check transaction totals with balance reports

  • Clear documentation: Always provide clear reasons for manual adjustments

  • Status management: Use Inactive status instead of deletion to preserve audit trails

Advanced Features

  • Dilution accuracy: Ensure incentive securities (Options, Rights) are marked Dilutive for accurate cap table reporting