Corporate actions are significant events that affect a company’s stock and, consequently, its assets, such as shares, bonds, or dividends. These events, which can be mandatory or voluntary, have a direct impact on investors and the behavior of assets in the market.
Most Common Corporate Actions
Split
A split occurs when a stock is divided into more units, reducing its individual price while maintaining the total value of your investment. For example, if you own a stock worth $100 and a 2:1 split is executed, you will have two shares worth $50 each. This can increase the liquidity of the asset by making it more accessible.
Dividends
Dividends are payments made by a company to its shareholders. They can be issued as cash or additional shares and represent a way to distribute the company’s profits among its investors.
Spin-Off
A spin-off occurs when a company separates part of its operations or assets to create a new independent company. Shareholders of the parent company typically receive shares of the new company as part of this process.
Spin-Off Dividend
This event is similar to a spin-off, but shareholders receive dividends in the form of shares from the newly created company.
Merger
In a merger, two companies decide to unite and form a single entity. As a result, the shares of one or both companies may be converted into shares of the newly created company, potentially altering the structure of your portfolio.
Acquisition
An acquisition occurs when one company purchases another and integrates its operations. Depending on the type of acquisition, the acquired asset may change its name or be removed from the market.
Other Important Corporate Events
Relationship: Represents the connection between two assets due to events like mergers or acquisitions.
Ticker Change: Indicates that the asset’s symbol in the market has changed. For example, the ticker might change from “ABC” to “XYZ."
Listing: Means that an asset is now available for trading in the market.
Separation from Parent Company: Indicates that an asset has been separated from its parent company, creating a new entity.
Regulatory Delisting: Occurs when an asset is removed from the market for failing to comply with established regulations.
Delisted: Indicates that the asset is no longer traded in the market and cannot be bought or sold.
Initiated: Refers to corporate actions that are in progress but have not yet been completed.
Why Are They Important?
These corporate actions directly influence the behavior of your investments, as they can change the value of your assets or create new market opportunities. At Hapi, our team ensures that these events are processed transparently, so you, as a user, have clarity about changes in your portfolio.
If you have questions about a specific corporate action or need additional assistance, don’t hesitate to reach out. We’re here to help!