Corporate Actions

Corporate Actions are events initiated by the Public Company that may impact its Equity or Debt. Any corporate action is generally approved by the Board of Directors (BOD) of the company and further authorized by the shareholders of the company in Shareholders Meeting (AGM or EGM).

These corporate actions may or may not impact the shareholders of the company. Some corporate actions have impact on the shareholders for instance Dividend Declaration because it has a direct financial impact on the shareholders. If company goes for the Name Change then there would be no financial impact on the shareholders of the company.

There are three types of Corporate Actions –

1. Mandatory
• Approved by the Board of Directors (BOD) that affect all the shareholders. 
• It is compulsory for Shareholders to participate in such actions, like issuing cash dividend in which shareholder need not to do anything. 
• Shareholder is the passive beneficiary in these actions and takes the benefit.
2. Voluntary
• Shareholders have a choice, whether they want to be a part of Corporate Action or not.
• A response is required by the company to process the action. It’s up to shareholder to participate or not participate in such Corporate Actions.
• Right Issues – It is a choice of the existing shareholder to subscribe for it or not.
3. Mandatory with Choice
• In case of dividend, shareholder may have a choice to get cash dividend or a stock dividend.
• Generally, default option is cash dividend.

Above Corporate Actions could further lead to any of the below impact –

1. Return Profits to Shareholders
• It is like announcing the dividend or giving the bonus to existing shareholders
2. Influence the share price, i.e. to enhance liquidity
• Announcing a stock split or a reverse stock split
3. For Corporate Restructuring
• Mergers or Acquisitions

One can get the information about upcoming corporate actions at below address-
https://www1.nseindia.com/corporates/corporateHome.html?id=eqCorpActions

Happy Learning!!!