What is a corporate action?
Corporate actions are processes carried out by companies wishing to change the structure of operations of their business.
How could it affect your trading?
Corporate actions influence a company’s performance and share price. If your CFD’s underlying share is affected by a corporate action, Alpari (UK) will make all necessary cash adjustments on your trading account.
Stay informed
To avoid any unexpected cash adjustments on your account, we highly recommend that you keep up to date with the stock market and latest company news as well as key economic data with our free Alpari Research section.
Here are a few examples of corporate actions:
A stock split increases the number of a corporation’s outstanding shares by dividing each share. This, in turn, reduces the price of the stock to make it more attractive for smaller investors.
The number of shares available is reduced. It is the opposite of a stock split.
A company looks to increase its capital and offers existing shareholders the possibility to acquire more shares at a price normally lower than the current price in the market.
A rights issue and entitlement issue are very similar; the main difference is that rights are tradable in the market, whereas the entitlement is not.
A merger is when two or more companies combine into one entity. A takeover is a change in the control of a company from one group of shareholders to another group by either a friendly acquisition or a hostile bid.
As a general rule, open positions in the company that has been acquired will be closed based on the terms of the merger/takeover.
A non-recurring distribution of company assets to its shareholders.
A dividend is a distribution of corporate earnings to company shareholders. It is calculated as follows: Dividend = Number of contracts x Dividend amount per share. Alpari (UK) will make a cash adjustment on your trading account on the ex-date.Dividends are distributed between shareholders..
