A listed corporate action is an event issued by the issuer of a listed security that will directly or indirectly affect a change in that listed security, thereby affecting the interests of shareholders holding shares in that listed security.
Common corporate actions include dividend distribution, bonus share distribution, rights issue, privatisation, share split/merger, etc.
(1) Dividend distribution
Cash dividends are the most common and basic form of dividends and bonuses paid in the form of cash. The cash paid by a company to its shareholders generally comes from the current earnings or accumulated profits of the company.
2) Distribution of bonus shares
Distribution Bonus Issue (Bonus Issue) is the payment of dividends and bonuses in the form of securities. Bonus Issue is a capitalization issue of a listed company, and Capitalization Issue is the further distribution of securities to existing shareholders in proportion to their holdings of securities.
3) Rights Issue
A rights issue is a way for a listed company to raise capital by making a rights offer to existing security holders to subscribe for securities in proportion to their existing holdings. Existing shareholders receive rights when the company declares a rights issue. If shareholders do not wish to take up the rights issue, they can either sell the rights issue in the market (for tradable rights issues only, as non-tradable rights issues cannot be sold) or simply waive their rights.
A privatisation is usually initiated by a controlling shareholder to buy up all the shares from other minority shareholders in cash or securities with a cash option. A listed company can complete a privatisation by way of "acquisition" or "arrangement by agreement". If the privatization is successful, the listed company will apply to the Stock Exchange for withdrawal of its listing status.
(5) Share splitting, merging and conversion
Subdivision, consolidation and conversion are exchanges of existing listed securities for new securities, where subdivision means the subdivision of existing qualifying securities into "new" shares of lower par value and consolidation means the consolidation of several existing qualifying securities into one "new" share of higher par value.
(6) Conversion of share options
The holder of a warrant is entitled to subscribe for a specified number of securities at a specified "subscription" price, or to exercise the warrant at a specified "exercise" price and receive the proceeds, at the exercise period or on a specified exercise date. A conversion of a warrant is the exchange of a warrant for a specified number of securities at a specified "subscription" price.