Understanding Corporate Actions

What Are Corporate Actions?

A corporate action is an event initiated by an issuer that affects the securities (equity or debt) issued by the company. These include, mergers and acquisitions, spin-offs, cash stock mergers, forward and reverse stock splits and name changes. Some corporate actions, such as a dividend (for equity securities) or coupon payment (for debt securities or bonds) may have a direct financial impact on shareholders or bondholders. Some, such as stock splits, may have an indirect impact on shareholders, as the increased share liquidity may cause the stock price to rise. Others, such as a name change, have no direct financial impact.

Why Companies Issue Corporate Actions?

• To return profits to shareholders. A public company may declare a cash dividend to be paid on each outstanding share.
• To influence the share price. If the price of a stock is too high or too low, the stock’s liquidity suffers. Overpriced stocks will not be affordable to all investors, and underpriced stocks may be delisted. Corporate actions such as stock splits or reverse stock splits increase or decrease the number of outstanding shares resulting in a higher or lower stock price.
• For corporate restructuring. A merger is a corporate action in which two competitive or complementary companies join to increase profitability

Important Message for Clients:

1. While BMO InvestorLine is not required to communicate corporate actions, once the information becomes available we’ll make every effort to inform clients of any notifications through MyLink - your secure personal inbox, by phone or by mail.
   
   In addition, BMO InvestorLine is not responsible for any missed, lost or late communications sent through these channels. It is your responsibility to monitor the status of the securities you hold. 
   
   Remember to sign in to your account on a regularly basis to check MyLink for messages. 
   
   We advise you to review all corporate actions you receive, to ensure you are fully aware of any impact on the securities you hold. Please note that some corporate actions may require you to select one of several alternatives and may also be time sensitive. Therefore, your attention to corporate actions that may affect your securities is imperative.
   
   
2. BMO InvestorLine will not pay out or deposit funds, or adjust your security position until we’ve received the securities from the transfer agent representing the issuer, regardless of the dates disclosed in the corporate action.          
   
   
3. BMO InvestorLine will not permit you to sell the securities subject to the corporate action until we’ve received and deposited the shares to your account.                                    
   
   
4. Any proceeds resulting from a corporate action will be paid in the currency in which the security is held with BMO InvestorLine.