Corporate actions involving changes in the number of shares or capital structure can impact the number of securities in your portfolio, their par value, and shareholder rights.
To help you understand notifications and their impact on your investments, the most common types of such events are presented below:
1. SPLF - Stock Split (Corporate Action: Change in the Number of Shares - Stock Split).
A stock split means increase the number of shares outstanding with a proportional decrease in their price. This makes shares more accessible to investors without changing the company's value.
- Number of shares increases in the account;
- Price per share decreases pro rata;
- Total value of the position remains unchanged.
Example: 10 shares at $100 → 20 shares at $50. The total value of the position remains the same - $1,000.
2. SPLR - Stock Consolidation (Corporate Action: Change in the Number of Shares - Consolidation/Reverse Split).
Consolidation is a reduction in the number of shares while increasing their par value simultaneously. It is usually performed to increase the size of a stock or bring the price to a desired level.
- Number of shares decreases in the account;
- Price per share increases pro rata;
- Total value of the position remains unchanged.
Example: 20 shares at $50 → 10 shares at $100. The total value of the position remains the same-$1,000.
3. BIDS - Stocks Repurchase Offer (Corporate Action: Stocks Repurchase).
A bid means an offer by the issuing company to repurchase shares from shareholders. The repurchase price can often be above the market price, and the goal is to reduce the number of shares outstanding.
Participation in such transaction is voluntary. The offer specifies the price and terms of the repurchase in advance. If you agree, the company will buy back your shares under these terms.
4. PRIO - Preemptive Right to Purchase Shares (Corporate Action: Share Offering - Preemptive Right).
This is a form of offering new shares in which existing shareholders are granted a pre‑emptive right to purchase. The company limits the number of shares issued, allowing investors to retain their shareholding by exercising this option.
Participation is optional. If you exercise this option, you can purchase shares before other investors or under special terms. If you decline, your stake in the company may be reduced due to the increase in the number of shares outstanding.
5. EXOF - Exchange of Securities (Corporate Action: Exchange of Securities).
The exchange involves replacing existing securities with new securities and/or cash. This typically occurs during corporate restructuring, changes to the terms of the issue, or corporate transformations.
You receive different securities in exchange for those you previously held. The number and type of securities are determined by the terms of the exchange. If the transaction is voluntary, you decide whether to participate or not.
6. CONS - Absentee Voting (Corporate Action: Shareholder Vote).
Absentee voting means a request by the issuer or a third party to obtain shareholder consent without holding an in-person meeting. You can vote remotely (support or reject the proposal).
Participation is voluntary, but the final majority vote affects the subsequent terms of the securities' trading. The notice always specifies the voting time and procedure.
Essential Details to Know
- Most corporate actions are automatic - no action is required if the event is mandatory (MAND).
- For voluntary events (VOLU), the decision is yours - it's important to carefully review the terms and conditions.
- The number of shares, their par value, and even the structure of your portfolio may change, while the overall value of the position often remains the same.
- All events are originated by the issuer and reflected in your Broker Report.
Important!
In this section, the examples provided by Freedom Finance PLC (hereinafter referred to as the Company) are hypothetical, illustrative, and intended to provide a general explanation of the relevant provisions. These examples are not intended to apply to specific circumstances, do not take into account the individual circumstances and conditions of the Client, and should not be relied upon as the basis for making any investment or other decisions.
The Company assumes no liability for the accuracy, completeness, or interpretation of the information provided, or for any losses the Client may incur as a result of its use. The Company also assumes no liability for any consequences of investment decisions made by the Client based on this information. More detailed risk information is available in Annex 4 of the Brokerage Services Regulations, which is posted on the Company's official website.