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Encyclopedia > Corporate action

A corporate action is an event taken by a public company that has a direct financial impact on of its shareholders. [1] The shareholder's portfolio alteration is associated with cash or share movement. For example, a 2 for 1 stock split doubling a shareholders holdings or a dividend adding a cash payment. A public company is a company owned by the public rather than by relatively few individuals. ... A shareholder or stockholder is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. ... Stock split refers to a corporate action that increases the shares in a public company. ... // Dividends are payments made by a company to its shareholders. ...


Purpose

Companies usually use corporate actions to raise capital or return capital to shareholders. Corporate actions also occur when companies takeover or merge, combining two or more companies into one. Mergers, takeovers and spinoffs are usually motivated by companies strategic interests to consolidate a market, eliminate a competitor or put focus back on the core competencies. In politics, a capital (also called capital city or political capital — although the latter phrase has a second meaning based on an alternative sense of capital) is the principal city or town associated with a countrys government. ... This page deals with the combination of two companies into one. ... A takeover in commerce refers to one company (the acquirer) purchasing another (the target). ... A spin-off (or spinoff) is a new organization or entity formed by a split from a larger one, such as a television series based on a pre-existing one, or as a new company formed from a university research group. ...


Types

The most frequent example of a corporate action is a dividend, a cash payment to the shareholder taken from company profits. Dividends may sometimes have the option of converting the cash payment into shares, known as a dividend reinvestment plan. Other examples include rights, stock splits, mergers, takeovers, consolidations, buybacks, spinoffs and the release of warrants or options on the security. // Dividends are payments made by a company to its shareholders. ... A Dividend Reinvestment Plan (a. ... Stock split refers to a corporate action that increases the shares in a public company. ... This page deals with the combination of two companies into one. ... A takeover in commerce refers to one company (the acquirer) purchasing another (the target). ... A spin-off (or spinoff) is a new organization or entity formed by a split from a larger one such as a new company formed from a university research group. ...


Raising additional debt through the release of a bond is not typically considered a corporate action. Although such debt changes the finances of the company, it does not directly affect the valuation of the stock. In finance, a bond is a debt security, in which the issuer owes the holders a debt and is obliged to repay the principal and interest (the coupon) at a later date, termed maturity. ...


Voluntary and Involuntary Corporate Action: Corporate actions for which the concerned stoct holder needs to respond for the action to take effect is called voluntary corporate action(e.g Preferrence Issue) whereas corporate actions for which no such consent is required are refered to as Involuntary Corporate actions(e.g SPLIT)


References

  1. ^ http://www.investopedia.com/terms/c/corporateaction.asp

  Results from FactBites:
 
corporate action: Information from Answers.com (455 words)
A corporate action is an event taken by a public company that has a direct financial impact on of its shareholders.
The most frequent example of a corporate action is a dividend, a cash payment to the shareholder taken from company profits.
Raising additional debt through the release of a bond is not typically considered a corporate action.
Incorporation / Corporate Law--Alaska (3089 words)
Corporations Section of the Department of Community and Economic Development (note: this is where Articles of Incorporation are filed in the State of Alaska).
The corporate name may not contain a word or phrase that indicates or implies that the corporation is organized for a purpose other than the purpose contained in its articles of incorporation.
If the rights or options are to be issued to directors, officers, or employees of the corporation or of a subsidiary of the corporation and not to the shareholders generally, their issuance shall be authorized by the approval of the outstanding shares or must be consistent with a plan so approved or ratified.
  More results at FactBites »

 
 

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