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Corporate actions

A corporate action is an event initiated by a public company that affects the securities (equity or debt) issued by the company. Some corporate actions such as a dividend (for equity securities) or coupon payment (for debt securities) may have a direct financial impact on the shareholders or bondholders; another example is a call (early redemption) of a debt security. Other corporate actions such as stock split may have an indirect impact, as the increased liquidity of shares may cause the price of the stock to decrease. Some corporate actions such as name change have no direct financial impact on the shareholders. Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. Some examples are stock splits, dividends, mergers and acquisitions, rights issues and spin offs.

To find more information on corporation action by companies listed on the various exchanges, refer to the official website of the respective Exchanges here

Corporate actions taken by companies listed on SGX.

Kindly refer to CDP website for more information on the following types of corporate actions:
1. Dividends
2. Rights
3. Takeovers
4. Warrants
5. Coupon / Redemption

Examples of Types of Corporate Actions

S/No Types of Corporate Action Description
1 Bonus Issue

New shares in a Company XYZ that are issued free to existing shareholders. New shares are typically issued to shareholders in proportion to their holdings as at a date specified by the Company XYZ

For example, the Company XYZ declared 1 bonus share for every 10 shares held. If you are holding 1000 shares, your bonus entitlement will be 100 shares.


2 Share Split

A share split is similar to a bonus issue in that shareholders are issued with new shares at no cost. But its effect on the balance sheet is different from a bonus issue.

Usually, a share split reduces the par value of each share, but increases the number of shares by the same proportion.

For example, the Company XYZ declares Sub-division of every 1 existing ordinary share into 10 ordinary shares”.

If you originally held 1000 shares, your new holdings will be increased to 10000 shares.

3

Share Consolidation

Share consolidation is the opposite of a share split.

The existing shareholder's shares are replaced with a smaller number of shares with a higher par value. For example, the Company XYZ declared “Share consolidation of every 100 ordinary shares into 1 consolidated share” If you originally held 1000 shares, your new holdings will be reduced to 10 shares.


Effect on prices whenever there is a corporate action


The trading price will usually be adjusted accordingly to reflect the effect of the share consolidation / split / dividend / bonus / rights issues or others. However, the stock prices may also be affected by a myriad of factors such as the usual market forces of demand and supply, economic and political events (both locally and overseas).

The above information serves as an illustration only. One should not rely on the information above for your trading decision.


Indicators for Corporate Actions on Trading System effective 20 Dec 2015


SGX will display cum-entitlement (CE) and ex-entitlement (XE) corporate action indicators for stocks undergoing share consolidation or share split corporate actions. This will better alert market participants that a stock is about to or have just undergone a corporate action, and prompt them to find out more on the details of the corporate action event.

CE stands for cum-entitlement, which indicates that a stock is about to undergo a corporate action event and is trading on the basis of the upcoming corporate action event. Investors who purchase the stock when the CE indicator is displayed will be entitled to the corporate action declared by the company.

XE stands for ex-entitlement, which indicates that a stock has just undergone a corporate action and is trading on the basis that the corporate action event applies. Investors who purchase the stock when the XE indicator is displayed will not be entitled to the corporate action previously declared by the company.

After a company makes an announcement for share consolidation, CE will be displayed for the stock, indicating that the stock is trading on a pre-consolidation basis and is about to undergo a share consolidation.

On the ex-date, consolidation is effective and the XE will be displayed for the stock to indicate that it is now trading on a post consolidation basis.

The table below shows the display of indicators CE/XE on key dates:

   Pre-Consolidated Counter  Post-Consolidated Counter
 (Different stock code)
Ready and Unit Share Markets
 After company announcement on
 corporate action
 CE

 Not trading yet

 On ex-date (first day trading on
 consolidated basis)
 XE

 XE

 ex+1 and ex+2

 XE

 XE

 On record date +1 (or ex+3)  DL (to be delisted)  Remove XE indicator

Details on corporate actions can be found in the company announcements page or the corporate action page on SGX.com.

 

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