Corporate actions are offers issued by a publicly traded company that affects the securities issued by a company.
Corporate actions are offers issued by a publicly traded company that affects the securities issued by a company. They may have an impact on reportable capital gains and income. There are two types of corporate actions: voluntary and mandatory. Voluntary corporate actions mean shareholders can elect to participate. These may include rights issues, buybacks and dividend payments. Mandatory corporate actions are automatically applied as they do not provide shareholders with the option to participate or not participate. These may relate to company restructure, such as mergers.
Important information regarding election deadlines
Most corporate action instructions need to be submitted 7 days before the expiration of the offer.
- Rights Issue: A rights issue is an issue of rights to a company's existing shareholders that entitles them to buy additional shares directly from the company in proportion to their existing holdings.
- Buyback/Share Repurchase: Share are bought back by the company or an investor. Two types: tender and open market.
- Dividend Payment: Money paid from a company’s profits. May be issued in the form of cash or stock.
- Dividend Reinvestment: Money issued as dividends is immediately used to purchase more shares in that company.
- Stock split: a company issues additional shares in proportion to the holdings.
- Reverse stock split: Stocks are merged to form a smaller number of effectively more valuable shares.
- Merger: A merger occurs when two existing companies combine into one new company or when one company acquires another.
- Spinoff: Spinoffs are corporate manoeuvres where a company separates a part of its business, employees and management team into a new, separate publicly traded company.