Corporate actions are changes initiated by public companies that impact its stakeholders. If you’re a shareholder in a company, that’s you!
You will generally receive Corporate Actions over email or through direct mail. As an owner, you’re likely to receive corporate action letters from time to time. We can’t control when or why you might receive them, but we hope that having some insight into the process helps you understand a bit more about owning the brands you love.
Here’s a bit of info to help you understand the types of corporate actions you might receive.
Types of corporate actions
Mandatory corporate actions are events initiated by the board of directors on behalf of a company. If you’re a shareholder, these actions affect you, but you generally do not have to take any action. Some mandatory corporate actions, such as dividends, are applied to your investment automatically. More examples of mandatory actions: company name changes, mergers, return of capital, stock splits, and more.
Voluntary corporate actions are offers that shareholders elect to take part in by responding to the corporation. If you’re a shareholder, you’ll need to respond to the offer to have it applied to your investment. Some examples: tender offers, buyback offers, delisting, rights issues.
Mandatory with choice corporate actions are measures where shareholders can choose from a range of options. The corporation will elect one default option, and if shareholders do not respond, the default option will be applied. Some examples: cash or stock dividend options, subscription rights offerings.
What to do if you receive a corporation action
Likely nothing! In most cases, corporate actions do not require you to respond. If you receive a corporate action and need help understanding it, please reach out to us by sending a support message through the app.