U.S. persons holding securities issued by entities that are domiciled outside of the U.S., but which invest within the U.S. should pay particular attention to IB's tax withholding obligation in the event of a distribution by the issuer. These entities, which may include Canadian unit trusts, REITS, limited partnerships or other common shares, often distribute dividends and/or interest based on both the U.S. and non-U.S. sourced income. While U.S. persons reporting a valid taxpayer ID number on their Form W-9 are generally exempt from backup withholding on U.S. sourced income, the nature of the custodial arrangement for these particular securities is such that U.S persons may be subject to a withholding tax calculated at a fixed rate of 30% on that portion of the distribution associated with the US-sourced income. This is in addition to any withholding required to be applied to the non-U.S. sourced portion of the distribution as required by the relevant foreign taxing body.

It's important to note that these taxes will be withheld by the depository prior to remittance of the distribution to IB and the subsequent credit of the net distribution to the accounts of any U.S. persons. Accordingly, IB has no ability to reverse or reclaim the withholding on behalf of its clients. In addition, as IB does not remit the withholdings to the tax authority, we do not report such withholdings to either the tax authority or clients on their year-end tax forms.

As IB does not provide tax advice or guidance, we recommend that you consult with your tax advisor for assistance in determining the eligibility, if any, for a tax credit on this withholding.

Below lists securities where this type of withholding has been applied previously. This list is for informational purposes only and may not include all securities.

A voluntary corporate action may have restrictions associated with it in terms of those shareholders considered eligible, either for notification or participation in a voluntary offer. Such restrictions may include, but are not limited to the following:

Residency restrictions - such a restriction, as set out in the voluntary offer documentation, will either include or exclude residents of specified countries from participating in an offer. The details of any residency restriction will be outlined in the offer documentation and may be verified with the company's Investor Relation department.

Citizenship restrictions - similar to residency restriction; however the restriction is based on the country of citizenship rather than the current residency of the account holder.

Qualified Investor restriction - a company may open an offer only to Qualified investors. This type of restriction will be outlined in the offer details and may be verified with the company's Investor Relation department. IB will not verify qualified investor status prior to the submission of instructions to the depository or agent. Customers are responsible for confirming they are eligible to participate in the offer should this restriction be in place.

Notification restriction - In certain instances, Interactive Brokers LLC may be restricted from providing notification of the complete offer details. In such a case, customers will be responsible for researching upcoming voluntary corporate actions through a third party. Any election to such an offer must be submitted to IB by creating a ticket in IB's Account Management Message Center. Instructions submitted in this manner are handled on a best-efforts basis.

Australian rights restrictions: IB does not support rounding up of fractional entitlements. For the purposes of calculating a client's rights entitlement to participate in rights issues, IB will round down fractional entitlements to, if less than 1, zero, and if greater than 1, the nearest whole number. For example, in a 1:10 rights issue, if a client holds less than 10 shares of the issuer, then when IB determines a client's rights entitlement it will round down to zero; if a client hods between 10 and 19, IB will round down to 1.  To participate in a rights issue, elections must be submitted via the Account Management election tool.

In the event an account is unable to view the full details of a corporate action, but believes the offer should be open to the account please contact IB by creating a ticket through IB's Account Management Message Center. Therein, please detail the offer and the reason the account should be considered eligible and IB will investigate the issue.

1. Accessing the Tool

To access the Voluntary Corporate Action Election Tool, log into the Portal and click on the Tools icon located in the upper left hand corner of the screen. From the list of available tools, select Corp Actions. Then select the tab titled Sub Account Choice CA as depicted in the exhibit below.

2. Selecting an Event

An event list window will appear detailing, by row, those voluntary corporate actions associated with positions maintained in a sub-account where the deadline for provided election instructions has not yet expired. Each event will reflect the deadline, eligible position and the state of election actions, if any, taken to-date (i.e., No Allocations, Partly Allocated, Allocated). To change an existing election action or to provide allocation instructions to an event not previously acted upon, click on the Change or Allocate link located in the Action column as displayed below

3. Submitting Instructions

Once an action has been specified the election screen will appear, providing summary information regarding the nature of the event, the method for submitting elections and detail as to the effective date and deadline. Located below the event information is the position detail aggregated across all sub-accounts, including the following:

• Total position eligible for allocation
• Current unallocated position
• Revised unallocated position

The Voluntary Corporate Action Election Tool offers two methods for submitting election instructions:

• Submit a quantity of shares per specified account
• Submit a percentage of shares to allocate across all accounts

Examples for each of these methods are provided below:

A. To submit shares or value for a specific account

Select the account from the drop-down selector located to the left of the Total eligible position detail

Under the column titled New, submit the specific number of shares you wish to submit to the given election for the selected account.
 

Submit Save 

B. To submit a percentage of shares to allocate across all accounts

Select ALL from the drop-down selector located to the left of the Total eligible position detail

Under the column titled %, submit the percentage of shares you wish to submit to the given election

All new percentage allocations will be applied to the Revised Unallocated portion of the shares and will be added to any previous allocation.

Submit Save

IMPORTANT NOTE: If one submits shares using a combination of share quantity and then percentage, any accounts designated for allocation on a per share quantity will also then have their unallocated shares submitted on the same percentage basis as the remaining accounts. If this is not your intent you will need to revisit those accounts and adjust their share allocations accordingly.

To reduce a previously submitted percentage allocation

1. Select "Remove All Allocations"
2. Enter a new % allocation for All accounts

Note: If elections have been made on a per-account basis, selecting "Remove All Allocations" will remove all account-specific allocations as well.

Frequently Asked Questions

How do I know if the election has been accepted?

After an election has been submitted and the user selects "SAVE" from the election screen, a new ticket will be created and will be available in the Message Center. This ticket will detail whether a submitted election has been accepted and/or acknowledged. The ticket will also detail the election which has been made for each sub-account. In the event the election is incorrect, a user may re-enter the election screen prior to the deadline in order to update the elections.

Sample unread ticket - the Summary will display as Voluntary CA Election

Sample ticket detailing the acknowledged receipt and that the elections will submitted to the depository or agent

How is the percentage allocation processed?

Each account will have the entered allocation applied to the eligible, unallocated shares.

Assume there are 4 sub-accounts with the following holdings:

 An election for 50% of the shares is submitted to tender shares to an offer. The allocation will be applied as follows:

Can both methods be used on the same voluntary offer?

Yes. Both allocation methods may be used on the same offer. This will allow a user to easily allocate a percentage of all shares plus all eligible shares for a specific account.

If I submit an account specific election and a percentage allocation for all accounts, how will the election be made?

Percentage allocations are posted only to the eligible, unallocated share quantities. Therefore both the specific and percentage allocations will be allocated.

Assume there are four sub-accounts with the following holdings:

If an election is made to tender 50 shares in Account A the elections will be as follows:

If an election is then made to allocate 50% of ALL remaining shares, the elections will be as follows:

How will fractional shares be treated as a result of using a percentage allocation?

If the election quantity is a fractional share as a result of the percentage allocation, then the fractional share will be truncated and submitted to the default allocation.

Assume there are 3 sub-accounts with the following holdings

If an election of 50% is submitted, each account will have 50% of the eligible, unallocated shares elected on.

Does it matter the order in which I allocate to the accounts?

If a user first allocates positions as a percentage using the All Accounts function and then selects an individual account, the user may override the percentage allocation for the individual account. In this manner, a user may elect 50% of all unallocated eligible shares to be allocated and subsequently reduce the election in Account A to fewer than 50% by making a change in the account specific allocation.

Interactive Brokers services relating to corporate actions are as follows:

1. The processing of mandatory corporate actions (e.g. prompt dividend recovery, spin-offs, stock splits, effective mergers and etc.) at no extra cost; and

2. Providing, on a best efforts basis, details of corporate action announcements associated with stock and option positions held in your account.  These details are provided in the form of a web ticket posted to the Corporate Actions tab of your Message Center.  Account holders may also elect to set their preferences so as to receive a copy of such details via email.  Information provided includes

• Mandatory offers - general information regarding mandatory offers
• Voluntary offers - eligible account holders may submit elections directly through Account Management

IMPORTANT NOTE:
Interactive Brokers does not provide any guidance, consultation or advice regarding corporate actions to its customers. IB customers are solely responsible for the monitoring of the existence of a corporate action, understanding the rights and terms of any corporate action and providing timely and accurate instructions regarding the handling for any voluntary corporate action.