Corporate Actions

Definition of corporate actions
 Financial transactions or other non-financial dealings
• between a company and the existing or potential investors in its securities or
• by one company in the securities of another company in which the first company is interested

Reasons for corporate actions
 Distributions of profits
 Adjustment of capital structure, e.g. rebalancing of equity and debt
 Manipulation of eps, eps growth, or other key indicators of financial strength or performance
 Acquisition of new businesses or divestment of existing businesses
 Signalling to investors

Classification of corporate actions
 Mandatory –v- discretionary
 Cash –v- non-cash
 Investor wealth-affecting –v- wealth-neutral
 Regular –v- exceptional
 Tax-driven –v- tax-neutral

Distributions
 Regular dividends: cash or scrip - interim and final - dividend policy – managing investor expectations
 Special distributions: rationale – timing- method – tax implications

Adjustment of capital structure
 Optimum capital structure: implications for company value - theory and practice
 Share repurchase: pros and cons of different methods – tax implications
 Share splits and reverse splits: reasons (good and not-so-good)
 Convertible bond issues: rationale for issuance – procedure on conversion

Acquisition and divestment
 Cash or shares? – pros and cons for shareholders and other stakeholders
 Dealing with non-controlling interests (formerly known as minority interests)

Signalling effects of corporate actions
 Directors’ confidence in (or caution about) the future
 The importance of maintaining consistent policies and of avoiding unscheduled reductions in dividend

Delivery:	Classroom
Regions:	London
Category:	Accountancy