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url: /glossary/corporate-action.md
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## Corporate Action

A Corporate Action is an event initiated by a company that affects its shareholders or bondholders. It usually requires investors to take notice, and sometimes to make a decision.

Three main types of corporate actions

1. Mandatory Corporate Actions

Shareholders do not need to take action; the event happens automatically.
Examples:

Dividends (cash or stock)

Stock splits / reverse splits

Mergers or acquisitions (when shareholders automatically receive shares or cash)

2. Voluntary Corporate Actions

Shareholders choose whether to participate.
Examples:

Rights issues (option to buy new shares at a discount)

Tender offers (offer to sell shares back to the company)

Dividend reinvestment plans (DRIPs)

3. Mandatory with Choice

Event is mandatory, but investors can choose between several options.
Example:

A company offers either cash or shares as consideration in a merger.

Why corporate actions matter

They can:

change the number or value of shares you own

affect the company’s structure

influence the stock price

require decisions that impact your investment return