{"id":2511,"date":"2021-08-16T13:24:39","date_gmt":"2021-08-16T13:24:39","guid":{"rendered":"https:\/\/www.paytmmoney.com\/blog\/?p=2511"},"modified":"2021-08-16T13:25:35","modified_gmt":"2021-08-16T13:25:35","slug":"corporate-actions-paytm-money","status":"publish","type":"post","link":"https:\/\/www.paytmmoney.com\/blog\/corporate-actions-paytm-money\/","title":{"rendered":"All About Corporate Actions In Paytm Money"},"content":{"rendered":"<h2><span style=\"font-weight: 400;\">What Are Corporate Actions?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A corporate action is\u00a0an event carried out by a publicly traded company that materially impacts its stakeholders. These events are generally approved by the company&#8217;s\u00a0<\/span><span style=\"font-weight: 400;\">board of directors<\/span><span style=\"font-weight: 400;\">.<\/span> <span style=\"font-weight: 400;\">When a<\/span><span style=\"font-weight: 400;\"> company<\/span><span style=\"font-weight: 400;\"> issues a\u00a0corporate action, it is initiating a process that\u00a0directly affects the securities issued by that company.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Corporate actions can be either mandatory or voluntary.\u00a0Mandatory corporate actions are applied to the investments by default, while voluntary corporate actions require an investor&#8217;s response to be applied. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Stock splits and bonus are examples of mandatory corporate actions; optional dividends and\u00a0<\/span><span style=\"font-weight: 400;\">rights issues<\/span><span style=\"font-weight: 400;\">\u00a0are examples of voluntary corporate actions. <\/span><span style=\"font-weight: 400;\">These may be either monetary e.g. dividend, or non-monetary e.g. bonus, rights, or stock splits.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Some common terms used in the context of Corporate Actions:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\"><strong>Declaration Date:<\/strong> This is the date on which the board of directors announces to shareholders and the market as a whole that the company stock will undergo a particular Corporate Action<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Ex-Date: <\/strong><span style=\"font-weight: 400;\">This is the date on which security trades without the benefit of Corporate Action. An investor buying security on or after the ex-date is not eligible for the Corporate Action by the Company.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><strong>Record-Date:<\/strong><span style=\"font-weight: 400;\"> This is the date on which the company looks at its records to see who are the shareholders of the company entitled for the Corporate Action.\u00a0 An investor holding\u00a0shares on record date will be eligible for the\u00a0Corporate Action on that share.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Eligibility For Corporate Action:<\/span><\/h2>\n<p><img decoding=\"async\" class=\"aligncenter wp-image-2512 size-full\" src=\"https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2021\/08\/eligibility-for-corporate-action-paytm-money.png\" alt=\"eligibility for corporate action paytm money\" width=\"939\" height=\"395\" srcset=\"https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2021\/08\/eligibility-for-corporate-action-paytm-money.png 939w, https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2021\/08\/eligibility-for-corporate-action-paytm-money-300x126.png 300w, https:\/\/www.paytmmoney.com\/blog\/wp-content\/uploads\/2021\/08\/eligibility-for-corporate-action-paytm-money-768x323.png 768w\" sizes=\"(max-width: 939px) 100vw, 939px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">The different types of corporate actions are:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Dividend<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Simply defined, Dividend is the portion of profit of a company, distributed to its shareholders.<\/span><span style=\"font-weight: 400;\"> Typically, dividends are cash payments made on a per-share basis to investors. For instance, if a company pays a dividend of Rs 2 per share, an investor with 10 shares would receive Rs. 20 in cash.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Stock Split<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">A company increases the number of shares that are outstanding by issuing more shares to existing shareholders. For example, in a 1:2 stock split, every shareholder holding one share is given an additional share. In such a case, the face value of the share is reduced (in this case by half).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The stock price is also affected by a stock split. After a split, the stock price of the company reduces since the number of outstanding shares increases, however the market capitalization remains the same.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Bonus<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">A\u00a0bonus share\u00a0is a free\u00a0share\u00a0of stock given to current shareholders in a company, based upon the number of\u00a0shares\u00a0that the shareholder already owns. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">While the issue of\u00a0bonus shares\u00a0increases the total number of\u00a0shares\u00a0issued and owned, it does not change the market capitalization of the company. For example, if the Bonus ratio is 1:2, it means that you will be given a bonus of 1 new stock for every 2 stocks you own of the same company. The average price will come down, adjusted to the total investment.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Merger<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">The combining of two or more companies is called a merger. In this case, stockholders of one company are offered securities in the acquiring company in exchange for the surrender of their securities.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Demerger<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Demergers are situations in which divisions or subsidiaries of parent companies are hived off into independent corporations. Generally, the parent company maintains some degree of financial interest in the newly formed corporation, although that interest may not be enough to maintain control of the new corporate entity.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Consolidation\u00a0<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">A company would issue a consolidation (reverse stock split) to increase the share price because they feel it would be more marketable at a higher price. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The nominal value of each share is adjusted to maintain total market value as before the consolidation. The new shares are issued free of all charges to shareholders. On the effective date of the consolidation, the price per share is adjusted to take into account the reduced number of shares in issue.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Right Issue<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">When a company wants to raise capital, issue of fresh shares to the existing shareholders is one option available to the company. In such an issue, existing shareholders have the right to buy a specified number of new shares of the company at a specified price within a specified time. Usually this price is below the market price. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">The idea is to reward existing shareholders with an investment opportunity, which is perceived to be attractive. This is a voluntary corporate action, which means a stockholder can choose not to exercise their right.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span style=\"font-weight: 400;\">Buy Back<\/span><\/h3>\n<\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Offer by the issuing company to existing shareholders to repurchase the company\u2019s own shares or other securities convertible into shares is called Buyback.\u00a0 This results in a reduction in the number of outstanding shares.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, if you are a stockholder for a company that has announced a Corporate Action, look out for the impact of the corporate action on your holdings. We have an easier way out for you; we have added a tag for Corporate Action in company pages, holdings and watchlist. Now, you can view upfront which stocks and ETFs will have corporate action.<\/span><\/p>\n<p>Also Read- <a href=\"https:\/\/www.paytmmoney.com\/blog\/paytm-money-annual-report-how-the-young-indian-millennial-invests\/\">Paytm Money Annual Report: How the young indian millennial invests<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What Are Corporate Actions? A corporate action is\u00a0an event carried out by a publicly traded company that materially impacts its stakeholders. These events are generally approved by the company&#8217;s\u00a0board of directors. When a company issues a\u00a0corporate action, it is initiating a process that\u00a0directly affects the securities issued by that company. Corporate actions can be either<a href=\"https:\/\/www.paytmmoney.com\/blog\/corporate-actions-paytm-money\/\">Continue reading <span class=\"sr-only\">&#8220;All About Corporate Actions In Paytm Money&#8221;<\/span><\/a><\/p>\n","protected":false},"author":17,"featured_media":2513,"comment_status":"open","ping_status":"open","sticky":false,"template":"single-classic-ns.php","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[],"class_list":["post-2511","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-announcements"],"_links":{"self":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/2511","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/comments?post=2511"}],"version-history":[{"count":0,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/posts\/2511\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media\/2513"}],"wp:attachment":[{"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/media?parent=2511"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/categories?post=2511"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.paytmmoney.com\/blog\/wp-json\/wp\/v2\/tags?post=2511"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}