A corporate action is any decision made by a company that brings a material change to its stock or affects its shareholders. When a company announces a bonus issue, pays a dividend, splits its stock, or goes through a merger, each of these is a corporate action.
As a shareholder, corporate actions directly affect the number of shares you hold, the price of those shares, or both.
Common Corporate Actions You’ll Come Across
- Dividend – The company distributes a portion of its profits to shareholders in cash.
- Bonus Issue – Existing shareholders receive additional shares at no cost.
- Stock Split – Shares are divided into multiple units, adjusting the price proportionally.
- Rights Issue – Shareholders get the option to buy additional shares at a discounted price.
- Buyback — The company repurchases its own shares from shareholders.
- Merger or Acquisition — The company combines with or is acquired by another entity.
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