A list of Corporate Actions Events
EQUITIES:
Mandatory Events
Assimilation - Absorption of a new issue of stock into the parent security where the
original shares did not fully rank with the parent shares. After the event, the assimilated
shares rank with the parent.
Acquisition - A company adopting a growth strategy can use several means in order to
seize control of other companies.
Bankruptcy - The Company announces bankruptcy protection and the legal proceedings
start in which it will be decided what pay-outs will be paid to stakeholders.
Bonus Issue - Shareholders are awarded additional securities (shares, rights or warrants)
free of payment. The nominal value of shares does not change.
Bonus Rights - Distribution of rights which provide existing shareholders the privilege to
subscribe to additional shares at a discounted rate. This corporate action has similar
features to a bonus and rights issue.
Cash Dividend - The Company pays out a cash amount from its profits to shareholders.
Class Action - A lawsuit is being made against the company (usually by a large group of
shareholders or by a representative person or organization) that may result in a payment
to the shareholders.
Delisting - The Company announces that it securities will no longer be listed on a stock
exchange and that they will be booked out.
De-merger
One company de-merges itself into 2 or more companies. The shares of the old company
are booked out and the shares of the new companies will be booked in according to a set
ratio.
General Announcement - An event used by the company to notify its shareholders of
any events that take place. This event type is used to communicate several types of
information to the shareholders.
Initial Public Offering (IPO) - This is the first corporate actions event in the history
of any company. The first time that a company gets listed on a stock exchange is
regarded as an event in itself. Underwriters will try to get as many buyers for the newly
listed shares for a price as high as possible. Any shares they cannot sell will be bought by
the
underwriters.
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Liquidation
Liquidation proceedings consist of a distribution of cash and/or assets. Debt may be paid
in order of priority based on preferred claims to assets specified by the security e.g.
ordinary shares versus preferred shares.
Mandatory Exchange / Mandatory Conversion - Conversion of securities (generally
convertible bonds or preferred shares) into a set number of other forms of securities
(usually common shares).
Merger - Merger of 2 or more companies into one new company. The shares of the old
companies are consequently exchanged into shares in the new company according to a set
ratio.
Name Change - Name changes are normally proposed and approved at the Company’s
General meeting. This has no effect on the capital and shareholders of the company.
Par Value Change
Similar to stock splits where the share nominal value is changed which normally results
in a change in the number of shares held.
Scheme of Arrangement – Occurs when a parent company takes over its subsidiaries
and distributes proceeds to its shareholders.
Scrip Dividend – No stock dividends / coupons are issued but the shareholder can elect
to receive either cash or new shares based on the ratio or by the net dividend divided by
the re-investment price. The default is always cash.
Scrip Issue - Shareholders are awarded additional securities (shares, rights or warrants)
free of payment. The nominal value of shares does not change.
Spin-off - A distribution of subsidiary stock to the shareholders of the parent corporation
without having cost to the shareholder of the parent issue.
Stock Dividend - Almost identical to bonus issues where additional shares in either the
same or different stock is issued to shareholders of the underlying stock.
Stock Split - A stock split is a division of the company shares into ‘X’ number of new
shares with a nominal value of ‘1/X’ of the original share.
Other Event - An event that does not fit any other description.
Return of Capital - A cash amount will be paid to investors in combination with a
nominal value change of the shares.
Reverse Stock Split - The number of outstanding shares of the company gets reduced by
an ‘X’ number while the nominal value of the shares increases by ‘X’.
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Mandatory Events with Options
Cash Stock Option - Shareholders are offered the choice to receive the dividend in cash
or in additional new shares of the company (at a discount to market). Reinvesting often
carries a tax shield.
Merger with Elections – A merger of 2 or more companies into one new company. The
shares of the old companies are consequently exchanged into shares in the new company
according to a set ratio. Shareholders of both companies are offered choices regarding the
securities they receive
Spin-off with Elections - A distribution of subsidiary stock to the shareholders of the
parent corporation without cost to the shareholder of the parent issue whereby the
shareholders are offered choices regarding the resultant stock.
Voluntary Events
AGM / EGM – proxy voting on shareholders meetings - Every publicly traded
company has an annual general meeting where management presents several decisions
that need shareholder approval. The approval is given by means of voting for or against
each decision. Shareholders may attend the meeting in person or vote by proxy electronically or by mail via their brokers and custodian.
Buy-back program (BIDS) / Repurchase Offer - Offer by the issuing company to
existing shareholders to repurchase the company’s own shares or other securities
convertible into shares. This results in a reduction in the number of outstanding shares.
Dividend Reinvestment Plan (DRIP) - Similar to cash stock option. In this case
however, the company first pays the cash dividend after which shareholders are offered
the possibility to reinvest the cash dividend in new shares.
Dutch Auction - A Dutch Auction Offer specifies a price range within which a fixed
number of shares will ultimately be purchased. Shareholders are asked to submit
instructions as to what price they are willing to sell. Once all instructions have been
counted, the shares of the shareholders who voted to sell at the lowest prices will be
bought until either the fixed number of shares is reached or the upper limit of the price
range
is
reached.
Odd lot Tender - In case shares are tradeable in so called board lots of for example 100
shares only and a shareholder has an amount of shares that is not a multiple of the board
lot, then this additional quantity is called odd lot. An odd lot tender is an offer to
shareholders with odd lots to sell the shares in the odd lot at a given price. So for
example, if the board lot is 100 and a shareholder holds 150 shares, an odd lot tender will
give the shareholder to dispose of 50 shares at a given price. The board lot of 100 will
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still
be
tradable
as
normal.
Rights Auction - Rights to buy new shares are being auctioned - shareholders who
submit the highest prices at which they are willing to buy new shares will get the new
shares.
Rights Issue - Rights are issued to entitled shareholders of the underlying stock. They
allow the rights holder to subscribe to additional shares of either the same stock or
another stock or convertible bond, at the predetermined rate/ratio and price (usually at a
discount to the market rate). Rights are normally tradable and can be sold/bought in the
market, exercised or lapsed.
Subscription Offer - Offer to existing shareholders of new stock or convertible bonds.
Takeover - One company taking control over another company (usually by acquiring
the majority of outstanding share voting rights).
Tender Offer - Offer from Company A to shareholders of Company B to tender their
shares to company A at a given price. The given price can be payable in cash only, stock
in Company B only or a combination of cash and stock.
Voluntary Exchange / Optional Conversion - Offer to exchange shares of security A
into cash or into Security B.
BONDS
Conversion of convertible bonds - Convertible bonds are being converted in the
underlying shares.
Coupon Payment - interest payment - The issuer of the bond pays interest according to
the terms and conditions of the bond, ie interest rate and intervals of payment.
Early Redemption - The issuer of the bond repays the nominal prior to the maturity date
of the bond, normally with accrued interest.
Lottery (also known as a drawing) - The issuer redeems selected holdings before the
maturity date of the bond (early redemption).
Partial Redemption - The issuer of the bond repays part of the nominal prior to
maturity, normally with accrued interest.
Final Redemption - The issuer of the bond repays the nominal of the bond, normally
with accrued interest.
DERIVATIVES
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Optional Put - An event in which the holder of the put options has the option to exercise
the put option in order to sell the underlying security at a given price.
Warrant Exercise - An event in which the holder of the warrants has the option to
exercise the warrant in accordance with the terms and conditions of the warrant.
Warrant Expiry - An event that notifies the holder of the warrant that the warrant is
about to expire and the holder of the warrant is given the option to exercise the warrant.
Warrant Issue - Per share an amount of warrants is issued according to a specific ratio.
The warrant can entitle to sell or buy the underlying security at a given price within a
given timeframe.
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