Corporate Action refers to any event initiated by a company that brings a change to its securities, such as shares or bonds, affecting shareholdersí or bondholdersí rights. Corporate actions are significant because they influence investment value, shareholder returns, and market activity. Understanding corporate actions is essential for investors, traders, and financial analysts to make informed decisions and manage portfolios effectively.

Corporate actions can be broadly categorized into mandatory and voluntary actions. Mandatory corporate actions are automatically executed and require no shareholder approval, such as dividends, stock splits, or bonus issues. Voluntary corporate actions require shareholder consent, including rights issues, buybacks, or tender offers. Both types impact the companyís capital structure and the financial position of investors.

Common examples of corporate actions include dividends, bonus shares, stock splits, mergers and acquisitions, rights issues, and buybacks. For instance, when a company declares a dividend, shareholders listed on the record date receive a portion of the companyís profits. Similarly, a stock split increases the number of shares while adjusting the price proportionally, making shares more affordable without altering overall value.

Investors must track corporate actions to understand how their holdings are affected. Exchanges like NSE and BSE provide timely notifications of corporate actions, including record dates, ex-dates, and payment dates, ensuring transparency and compliance. Missing important corporate action updates can lead to missed entitlements or misinformed investment decisions.

From a regulatory perspective, corporate actions in India are governed by SEBI guidelines. Companies must disclose corporate actions publicly and follow prescribed procedures to maintain transparency, fairness, and protection of shareholder interests.

In summary, a corporate action is any event initiated by a company that affects its securities and shareholdersí rights. By understanding types, examples, and regulatory requirements, investors and market participants can manage investments efficiently, stay informed about entitlements, and make strategic decisions while ensuring compliance with SEBI regulations.