• CommSec

Corporate actions are initiated by a company or corporation, for the purpose of giving an entitlement to shareholders.

There are two types of corporate actions – voluntary and mandatory.

Voluntary corporate actions are ones where the shareholder has the option to participate.

Typically the shareholder will receive documentation from the company to participate or give up the offer.

Common voluntary corporate actions include:

  • Rights Issue: An offer of securities to existing shareholders in proportion to their shareholding. This enables shareholders to subscribe for additional shares at a pre-determined price
  • Buy Back: The purchase of its own shares by a company. Shareholders can sell their shares back to the company for the Buy Back price
  • Bonus Issue: When additional shares are issued by a company on a pro rata basis for free
  • Dividend Payment: A voluntary payment made by a company to its shareholders. The payment is a share of the companys profits and is based on the number of shares you hold. Shareholders may receive dividend payments in the form of cash or shares.
  • Company Option: This gives the holder the opportunity to buy shares at a fixed price by a predetermined date. At the predetermined date the shareholder must either acquire the shares or let the options expire
  • Call: A request for the shareholder to make a payment on outstanding amounts due on a share. The shareholder must meet the call request or forfeit the shares held. Calls can also be mandatory.

Mandatory corporate actions typically relate to company restructures or company administration.

Shareholders do not have a choice to participate or opt out. Mandatory corporate actions are published to advise shareholders of the event.

The company will notify you in writing about a corporate action it is responsible for. This information is also available in CommSec under ASX announcements.

Shareholders will receive documentation from the company detailing corporate actions and how to participate or give up the offer.

What youll learn:

  • What is a corporate action?
  • Voluntary and mandatory
  • Shareholder options

Written for: Beginner | Intermediate

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