A corporate event refers to any event driven by a company that generates significant changes to its structure or operations, and that may affect its shareholders and bondholders. These events are typically approved by the board of directors, though in some cases they also require shareholder approval.
At Folionet, corporate events are managed in accordance with the terms established by the issuing company. Our clearing partner, Apex Clearing LLC, handles the processing of events such as dividends, splits, reverse splits, mergers, acquisitions, and spin-offs. All adjustments resulting from these events are reflected automatically in your portfolio on a timely basis. Please note that in certain cases, some assets may be temporarily restricted from trading while processing is being completed.
Payment to shareholders made in cash or stock. Subject to board of directors approval, representing a distribution of earnings to a specific class or group of shareholders.
A stock split is a common corporate event that modifies a company's existing shares. In a split, the number of outstanding shares increases by a specific multiple, reducing the face value of each share. The total market value of the shares remains the same. For example, if ABC does a 2:1 split, the stock price will be halved but the number of shares will double.
A reverse split is also a common corporate event that modifies a company's existing shares. In this case, the number of outstanding shares decreases by a specific multiple, increasing the face value of each share. The total market value remains unchanged. For example, if ABC does a 1:10 reverse split, the stock price will increase 10x but the number of shares will decrease by 90%.
Mergers are corporate events that generate significant changes in companies. In a merger, two or more companies combine to form a new entity. Existing shareholders of the merged companies retain a stake in the new company.
Unlike a merger, in an acquisition one company (the acquirer) takes control of another. The acquired company ceases to exist and the acquirer assumes its business. The acquirer's securities continue to trade in the market.
A type of separation in which a parent company sells all shares of a subsidiary or distributes new shares of a division or company it owns, with the purpose of creating a new independent company.
