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Corporate actions
What is a corporate action?
A corporate action is an event initiated by a company you’ve invested in that could affect your investment.
For example, you may be given the option to buy more shares at a lower price. Or your shares could be split into new shares. Companies may decide to merge, or divide. All of these events could affect your investment.
In some cases you’ll be able to choose to participate and in other times it’ll be mandatory.
How do I respond to a corporate action?
To respond to the corporate action, you’ll need to sign in to your account and select ‘Corporate actions’ and then ‘Notifications’.
If you have any questions regarding corporate actions please read our FAQs as we’ve included the answers to the questions you ask us most.
Corporate action summary
- A corporate action is an event carried out by a company that impacts its stakeholders.
- Common corporate actions include the payment of dividends, stock splits, tender offers, and mergers and acquisitions.
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If you want to give your corporate action instructions there are two options available to you:
- Provide your instruction online by signing in to your account and selecting ‘corporate actions’ in the right hand navigation then ‘notifications’ and choosing the relevant account.
- Send your instruction by post to:
Scottish Widows Share Dealing
12 Wellington Place
Leeds
LS1 4AP
- Provide your instruction online by signing in to your account and selecting ‘corporate actions’ in the right hand navigation then ‘notifications’ and choosing the relevant account.
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If you have missed the deadline date we can no longer take your instructions.
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If you wish to alter an instruction you can do this online up to the advice date.
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We won’t inform you if any of your current or previous investments are involved in legal cases (including class action law suits).
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The cash will be paid into your nominated bank account.
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Yes. This can be done online and the cash can be reinvested from the date it is credited to your nominated bank account.
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Yes. This can be done online. Once the cash is credited to your account you can withdraw the amount to your nominated bank account.
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You can request a copy of an annual/interim report from the company's registrar.
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If you believe you should have received information on a corporate action you can check this on the corporate actions notifications page, our web chat service or by calling us on 0345 070 7129.
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This can vary, but normally we will tell you about a corporate action once the company has sent out the official documentation to shareholders. Scottish Widows Share Dealing won’t contact customers as a result of press or market speculation.
On some occasions when a corporate action doesn't affect your holding, and no action is required by shareholders, no prior notification will be sent and only a confirmation will be sent after the event.
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When a rights issue takes place, shareholders have the option to purchase additional shares at a discounted price.
If a shareholder chooses to action these rights then new shares will be allocated to them on receipt of payment and completion of the event. These shares will then become ordinary shares and will be tradeable at the current market price.
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By choosing not to action these rights a shareholder will not lose any shares, rights are offered by a company at a discounted price in addition to a shareholders existing shares.
Please note: While you won’t lose any existing shares your share holding will become more diluted as there will be more shares on a stock market.
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When a company announces a rights issue, holders of the stock will be issued ‘nil paid rights’ which each represent a ‘right’ to buy a new share.
As these ‘nil paid rights’ are tradable on the stock market, they are apportioned a value using the book cost of your total share holding.
When choosing to action your ‘rights’ and purchase additional shares, new shares will be given a book cost which will include the discounted offer price you paid and the stock market value of the nil paid rights.
Stock splits
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A company may decide to split its stock into new shares to increase its liquidity on the market, this usually happens when the share price is very high and makes it harder for smaller investors to buy into the company. Companies will usually use a 2-for-1 or 3-for-1 ratio which means for every share you had before you would receive 2 or 3 shares.
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If a company wants to attract new shareholders but feels that its share price is too high they can arrange a stock split to lower the stock’s price, making shares more affordable.
Mergers
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A merger is when two or more companies believe they can succeed in an even bigger market if they join forces.
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As with all corporate actions, an event could either push share prices higher or cause a fall.
Spin-off
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A spin-off is when a corporation creates a separate firm from part of its existing business.
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As with all corporate actions, a spin-off could either push share prices higher or cause a fall. A spin off would usually result in existing holders receiving shares in the new company based on their existing holding.