jeffn thank you for your response and I can appreciate your understanding.
I'm not certain how this term special divi started circulating and it's not stated as such anywhere in the Company's filings.
"Special dividend" is an informal term not recognized by the Financial Industry Regulatory Authority.
The term 'special dividend' is irrelevant to the establishment of dividend dates, as is evidenced by the fact that special dividend does not appear anywhere in the dividend date rules, and indeed does not appear anywhere on FINRA's website.
So in simplistic terms... A special dividend is nothing more than a dividend that is not regularly scheduled.
I know you are aware FINRA establishes all stock trading rules for all U.S. stock exchanges and there are only two sets of dividend date rules for U.S. publicly traded companies -- one for normal distributions, which are dividends or distributions that represent less than 25% of the stock's trading price, and the other for dividends or distributions equal to or exceeding 25% of the stock's trading price.
From FINRA's website, those two sets of rules are as follows:
(1) In respect to cash dividends or distributions, or stock dividends, and the issuance or distribution of warrants, which are less than 25% of the value of the subject security, if the definitive information is received sufficiently in advance of the record date, the date designated as the "ex-dividend date" shall be the second business day preceding the record date if the record date falls on a business day, or the third business day preceding the record date if the record date falls on a day designated by the Committee as a non-delivery date.
(2) In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of the subject security, the ex-dividend date shall be the first business day following the payable date.
With all dividends, the record date establishes that only the shares outstanding as of that date are eligible for the dividend.
With normal dividends that is a moot point because the ex-dividend date, being two business days before the record date, has already established which shares (and which shareholders) qualify for the dividend. But in the case of a dividend of 25% or more of the company's stock price, the ex-dividend date is after the record date, usually many days or weeks after, so the company may, if it chooses to do so, issue additional stock after the record date but before the ex-dividend date without affecting the gross amount of the declared dividend. While occasions of a secondary offering during such a period are rare, there are many more instances of shares being issued through dividend reinvestment plans and through exercise of stock options and convertible securities.
***In cases of a deferred ex-date, the only function of the record date is to determine on which shares the dividend is paid... Because of that -- and this is a critical point -- it is the ex-dividend date that determines who qualifies for the dividend, not the record date.
This can be very confusing, having the ex-dividend date after the payment date. To further confuse things, in such circumstances, any shareholders of record who sell their shares before a deferred ex-dividend date also sell the right to receive the dividend. This is not optional to the seller, it is mandatory. The right to receive the dividend is contained in an attachment to the sold shares and that attachment is called a due bill.
To summarize...
Dividend date information can be broken down to into five simple statements:
1. The record date determines which shares receive the dividend.
2. The ex-dividend date determines which shareholders receive the dividend.
3. For normal dividends, the ex-dividend date is two business days before the record date, unless the record date falls on an exchange holiday or a Saturday, in which case the ex-date shall be one day earlier than it otherwise would have been. If the record date falls on a Sunday, the ex-date will be two days earlier than it otherwise would have been.
4. For dividends above 25% of the stock price of the company, the ex-dividend date is the first business day after the payment date.
5. Dividends are not free money - the price of the stock is reduced by the amount of the dividend at the open of trading on the ex-dividend date.
Considering both Companies are "insolvent" there will not be a 'cash dividend' and shares issued may change accordingly...
To reiterate... If in cases of a deferred ex-date, the only function of the record date is to determine on which shares the dividend is paid. Because of that -- and this is a critical point -- it is the ex-dividend date that determines who qualifies for the dividend, not the record date.
The Company filings left the door open to issue 'Additional' stock without altering the declared dividend. No one has an official date for the ex-dividend until set by FINRA and the SS could change accordingly.
That said... Nothing will happen until the SEC has given their approval in regards to the filing...
The circumstances regarding the July 16, 2010 'Record Date' for that 'Share Distribution' is a concern and serves to make the entire transaction look suspicious which casts a shadow over the issue of 'Intentions' as an 'Inducement' which was the SEC's concern in their correspondence with the Company in 2010.
Furthermore... Why they didn't make the initial distribution, never having to explain 'why' and using a backdate doesn't get them past that question - they still didn't make the 'Initial' distribution.
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