1. Dividend

   The surplus left with the company's post-tax payments belongs to the shareholders and the company chooses whether to re-invest them for their business growth or to return it to the shareholders. This distribution of the company’s earnings to the shareholders is termed as dividend. Shareholders can receive both cash dividends and stock dividends. A company may declare interim dividends during the financial year and a final dividend at the end of the year. A company has to pay dividends within 30 days of declaration. Dividends are approved by the Board in the Annual General Meetings.




2. Stock Splits

   Stock splits increases the number of outstanding shares by splitting the existing shares of the company, i.e., the face value of the existing shares is reduced in a ratio defined by the board.

   A stock split of 1:5 means splitting an existing share into five shares.

   This reduces the price per share of the company, making it more affordable for the investor to buy. Generally, companies split their shares if the price of the share is high.




3. Rights Issue

   It involves issuing new shares to existing shareholders at a discounted price. The company does this to raise fresh capital. Subscribing to the rights issue is a choice and not a compulsion for the investors. As a result of the rights issue, the total number of outstanding shares of a company goes up.




4. Bonus Issue

   Issuing shares to existing shareholders without any involvement of cost is known as a bonus issue. Bonus shares are issued to influence the psychology of investors without an economic impact, as only outstanding shares will increase, and there is no change in the value of holdings. If a company issues a bonus in the ratio 1:5 then for every 5 shares held, the shareholder is entitled to 1 additional share.




5. Merger & Acquisitions

   In the case of mergers and acquisitions, a significant change in the ownership structure of the company can be seen. In a merger, any X company buys the shares of the target Y company, and both companies will combine to form a single company. In contrast, in the acquisition, the acquiring company takes over all or a portion of the target company. Both companies continue to exist after the acquisition.




6. Buyback of Shares

   When a company buys back its shares from the open market, it is known as a shares buyback. It reduces the number of outstanding shares of a company, which increases earnings per share. The shares are bought back using the tender method by making an offer to existing shareholders. The purpose behind buy back is to give a value boost to the stock price.

1. Spin-Offs

   Spin-offs, also known as Split offs, is a strategy when a company creates a separate new subsidiary from its parent entity. The stakeholders on a record date shall be eligible to receive shares in the new company in proportion to the shares held in the parent company.




2. Delisting of shares

   Delisting, as the name suggests, is the permanent removal of the shares of a company listed on the stock exchanges. Delisting can be a compulsion or a choice.




3. Loan-restructuring

   Loan restructuring is when a borrower is given a chance to restructure the loan terms as per current financial condition to avoid any potential default.




4. Change of Name

   Due to several reasons, a company may change its name, such as rebranding or to comply with regulatory requirements.

Corporate actions can significantly affect the stock price of any company. The impact will depend upon the corporate action the company is carrying out. Stock dividends can have a positive impact on the stock price, whereas mergers and acquisitions can have either a positive or negative impact on the stock price. Additionally, unexpected and uninformed corporate actions can affect the stock prices. Hence, the investors should keep themselves updated regarding various corporate actions.

It is essential to understand the intricacies and implications of corporate actions so that you can manage your portfolio accordingly. These actions can affect your returns, invested value etc.

Let us consider dividends. They are considered as a source of income for the investor. If the company pays out the dividend every year, the returns on your investment will automatically increase.

Corporate actions like mergers, acquisitions, and spin-offs can alter a company’s business strategy and financial outlook. This will eventually increase the risk size of your portfolio.

In summary, corporate actions are integral to portfolio management, influencing investment value, risk, and potential returns.

Every corporate action can help you build a strategy that aligns with your investment objective and help you analyse whether to hold the stock for long-term investment or sell it.

Corporate actions are announced on the specific company websites, which in turn are then circulated to news channels. You can also find a complete list of corporate actions on the official website of the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).

In summation, Corporate Actions have the potential to significantly impact the structure of the company and its prospects. These are generally initiated by the board of directors and approved by the shareholders.

In order to make informed decisions, Investors should stay informed about the companies they are investing since it can affect the company’s structure and stock price.