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A corporate action is an event initiated by a public company that affects the securities (equity or debt) issued by the company. Some corporate actions such as a dividend (for equity securities) or coupon payment (for debt securities) may have a direct financial impact on the shareholders or bondholders; another example is a call (early redemption) of a debt security. Other corporate actions such as stock split may have an indirect impact, as the increased liquidity of shares may cause the price of the stock to decrease. Some corporate actions such as name change have no direct financial impact on the shareholders. Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. Some examples are stock splits, dividends, mergers and acquisitions, rights issues and spin offs.
Corporate actions taken by companies listed on SGX.
Kindly refer to CDP website for more information on the following types of corporate actions:
1. Dividends
2. Rights
3. Takeovers
4. Warrants
5. Coupon / Redemption
Examples of Types of Corporate Actions
| S/No | Types of Corporate Action | Description |
|---|---|---|
| 1 | Bonus Issue | New shares in a Company XYZ that are issued free to existing shareholders. New shares are typically issued to shareholders in proportion to their holdings as at a date specified by the Company XYZ. For example, the Company XYZ declared 1 bonus share for every 10 shares held. If you are holding 1000 shares, your bonus entitlement will be 100 shares. |
| 2 | Share Split | A share split is similar to a bonus issue in that shareholders are issued with new shares at no cost. But its effect on the balance sheet is different from a bonus issue. Usually, a share split reduces the par value of each share, but increases the number of shares by the same proportion. For example, the Company XYZ declares Sub-division of every 1 existing ordinary share into 10 ordinary shares”. If you originally held 1000 shares, your new holdings will be increased to 10000 shares. |
| 3 | Share Consolidation | Share consolidation is the opposite of a share split. The existing shareholder's shares are replaced with a smaller number of shares with a higher par value. For example, the Company XYZ declared “Share consolidation of every 100 ordinary shares into 1 consolidated share” If you originally held 1000 shares, your new holdings will be reduced to 10 shares. |
