Corporate Actions

A corporate action occurs when a company does something that affects its share capital or its bonds. For example, most companies pay dividends to their shareholders twice a year. Corporate actions can be classified into two types.

Mandatory Corporate Action

A mandatory corporate action is mandated by the company, not requiring any intervention from the shareholders or bondholders. The most obvious example of a mandatory corporate action is the dividend payment since all shareholders automatically receive the dividend.

Voluntary Corporate Action

A voluntary corporate action is an action that requires the shareholder to make a decision. An example is a takeover bid – each shareholder must choose whether to accept the offer if the company is being bid for.