Corporate Actions Glossary

 A

  accredited investor accredited investor a person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience; to be considered an accredited investor, you must have earned income exceeding $200,000 (or $300,000 together with a spouse) for 2 consecutive years, and reasonably expect the same for the current year OR have a net worth over $1 million, either alone or together with your spouse (excluding the value of your primary residence)

 B

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 C

  capital stock capital stock the common and preferred stock a company is authorized to issue according to their corporate charter
  consent solicitation consent solicitation a request by the company to receive the consent of a bondholder to change the bond covenants
  corporate action corporate action a corporate action is an event that causes a material change to the structure of a publicly-traded company; these changes can affect the company's financial situation, stock price, performance, and your investment mix

 D

  declaration date declaration date the date a dividend is declared by the company
  distribution distribution the payment of cash or securities that are not part of a company's earnings
  dividend dividend a payment of earnings to shareholders
  due bill due bill in some cases, special dividends or stock distributions may have different rules than regular dividends concerning the ex-dividend date; in these cases, the ex-dividend date will be after the record date and pay date and is called a deferred ex-date; in a standard dividend scenario, one would need to own a stock (settled shares) by the record date in order to be entitled to the dividend; however, when there is a deferred ex-date, if one were to sell a stock after the record date but before the ex-dividend date, they would no longer be entitled to the dividend; the shares would be tagged with a "due bill" which means the seller is obligated to pay the dividend to the buyer; likewise, if one were to buy stock after the record date but before the ex-dividend date (and hold it through the ex-date), they would be entitled to the dividend from the seller
  dutch auction dutch auction a dutch auction is a type of voluntary tender offer specifying a price range within which a fixed number of shares will ultimately be purchased; shareholders participate by submitting instructions as to what price they're willing to sell at; once all instructions have been counted, the shares of those who voted to sell at the lowest prices will be bought until either the fixed number of shares is reached, or the upper limit of the price range is reached; there are no guarantees that your shares will be accepted at the conclusion of the offer

 E

  early premium early premium an additional distribution offered by a company during a corporate action to encourage holders to participate by an earlier date
  event type event type the kind of corporate action the company is initiating
  exchange offer exchange offer an offer to exchange one issue for another issue of the same company; the offer can also be an attempt by one company to gain control of another company, by offering its own shares in exchange for shares of the other company; and may include cash, new securities, or a combination of those for each share tendered
  exchange ratio exchange ratio the relative number of new shares given to existing shareholders of a company that has been acquired or involved in a merger; after the old company shares have been delivered, the exchange ratio is used to give shareholders the same relative value in new shares of the merged entity
  ex-dividend/distribution date ex-dividend/distribution date the day a stock begins to trade without the right to receive the dividend/distribution; some distributions may have a deferred ex-date which occurs one business date after the payment date
  expiring conversion expiring conversion the exchange of a convertible security, such as a bond into stock, within a predefined time period
  expiring right expiring right a type of security that gives the holder the right, but not the obligation, to buy a company's common stock at a fixed price for a predefined period of time, typically 2 to 3 weeks
  expiring warrant expiring warrant a type of security that gives the holder the right, but not the obligation, to buy shares from the company at a fixed price for a pre-defined time period

 F

  fees fees a charge by the paying agent for servicing the security; can also be applied for tax relief, or an issuance fee
  fixed income security fixed income security an investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity
  fixed spread fixed spread fixed spreads are the difference between the buy and sell prices of a particular currency pair; a fixed spread is predetermined, remains constant throughout all trading conditions, and allows traders to better strategize without factoring in an unpredictable variable that inflates transaction costs during the most critical times
  foreign withholding tax foreign withholding tax a withholding tax, or a retention tax, is an income tax to be paid to a foreign government which is withheld from the payment by the agent/issuer
  fractional shares fractional shares a share of equity that is less than one full share, usually as a result of stock splits, dividend reinvestment plans (DRIPs) and similar corporate actions

 G

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 H

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 I

  Instructions Instructions The directive that a shareholder gives to Fidelity regarding participation in a voluntary corporate action

 J

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 K

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 L

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 M

  mandatory corporate actions mandatory corporate actions A type of corporate action, like stock dividends, acquisition mergers, and company name changes, that impacts shareholders
  mandatory put mandatory put a bond contract requirement specifying that the bond will be repurchased by the issuing company or its agent upon a specified date, or when a particular event occurs
  merger with elections merger with elections a plan initiated when two or more companies elect to combine their assets and liabilities to form one company; in the case of a merger with elections, existing shareholders may elect to exchange their shares into shares of the new company, or receive cash for each share held

 N

(No entries)

 O

  odd lot odd lot any amount less than the standard 100 shares for stocks or $1000 principal amount for bonds
  odd lot offer odd lot offer an offer to purchase odd-lot shares
  odd lot preference odd lot preference in an event that is subject to proration, a company may give preference to holders of an 'odd lot' (typically 99 shares or less), provided that all of the shares are tendered
  offer details offer details information specific to a particular corporate action
  offered by offered by refers to the company hosting the offer
  open conversion period open conversion period The ability of a holder, for a fixed period of time, to convert their convertible securities as specified by the issuer
  optional put optional put An optional put is when a shareholder has the right, but not the obligation, to demand early repayment of the principal from the issuing company or a third party acting as agent for the issuer; the put option on a security can be exercised upon the occurrence of particular events or conditions, or at a certain time or times prior to maturity
  oversubscription oversubscription an offer that allows shareholders to purchase (on a best-efforts basis) additional shares over and above what they qualified for in the offer, subject to proration

 P

  payment date payment date the day the issuer plans to allocate the dividend payment; only one option may be allocated at a time (so there may be more than one actual payment date, depending on when that form of payment was released); if someone split their election, they might receive the cash on one date and the stock on another; payment may not be received for all selected options on the same date
  preferred shares preferred shares preferred shares that have fixed terms negotiated between the shareholder and the issuing company
  priority level priority level refers to the order in which CUSIPs will be accepted for a voluntary corporate action
  proration proration also known as pro rata basis, a company may specify a maximum amount of cash or securities they are willing to allocate to participating shareholders; if the overall payment for an offer would exceed the maximum cap, the company will proportionally accept only that number of shares which satisfies their desired payment

 Q

  qualified institutional buyers (QIB) qualified institutional buyers (QIB) a corporation that owns and invests a minimum of $100 million in securities on a discretionary basis; the broker-dealer threshold is $10 million; a QIB must be an institution, either domestic or foreign; individuals, regardless of their wealth level of or (not of) financial sophistication, are not permitted to be a QIBs

 R

  reasonable efforts reasonable efforts also known as best efforts, an arrangement (without guarantees) for a tender agent to accept participant instructions after the participation cutoff date and up to the offer's expiration date
  record date record date the cut-off date established by a company in order to determine which shareholders are eligible to receive a dividend or distribution
  rights rights instruments issued by companies to provide existing shareholders with the opportunity to preserve their fraction of corporate ownership
  rights offer rights offer also referred to as expiring rights, an offer granted to existing shareholders to purchase new shares below market price before the company offers them publicly

 S

  sealed bid sealed bid A sealed-bid corporate action is where all bidders submit sealed bids to the auctioneer by a set deadline; no bidder knows how much the other auction participants have bid, and the highest bidder is usually declared the winner of the bidding process
  spinoff spinoff conversion of a subsidiary or division of an existing company into a stand-alone entity
  status status the status reflects the current state of the corporate action offer

 T

  tender offer tender offer A tender offer is an offer to purchase shares of a company from shareholders, at a specific price for a certain period of time; the price may be higher than the company's stock price on the open market, and will include cash for each share tendered
  third party price third party price third party price depicts a security's price formulated from a third party vendor's proprietary pricing methodology; to establish this modeled price, a host of factors such as recent trade activity, size, timing, and yields of comparable bonds are used

 U

  upcoming cutoff date upcoming cutoff date the next deadline during an active offer for you to be able to participate; we accept instructions before this date, and on the date itself until approximately 6:30 p.m. ET; 
please note that the cutoff date is different from the expiration date; as a cutoff date is when you need to provide instructions for the offer itself or an early option, and the expiration date is the last day the offer is active

 V

  volume-weighted average prices (VWAPS) volume-weighted average prices (VWAPS) volume-weighted average prices (VWAP) are trading benchmarks used especially in pension plans; VWAP is calculated by adding up the dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the day
  voluntary corporate actions voluntary corporate actions actions that shareholders can decide whether or not to participate in; these are events like tender offers, Dutch auctions, share buybacks and rights issues

 W

  warrant warrant a derivative security that gives the holder the right to purchase or sell shares from or to the issuer of the warrant at a specific price within a certain time frame; no dividends are being paid on warrants and warrants can be traded on the market
  withdraw date withdraw date the withdraw date is the last day you can cancel your instructions and withdraw from an offer; sometimes, this date precedes the final cutoff date

 X

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 Y

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 Z

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