CORPORATE ACTIONS AND FILINGS

ClearTrust can assist with your corporate action, even if we’re not your transfer agent.

 

Most common types of corporate actions:

  • Merger

  • Name change

  • Spinoff

  • Stock split

  • Tender offer

  • Uplisting

  • Acquisition

  • Buyback

  • Bankruptcy

  • Dividend

  • Delisting

  • Liquidation

 

SEC FILINGS

ClearTrust’s strategic partner can help you with your EDGAR and XBRL filings. Please contact us for an introduction.



Definitions

ACQUISITION:

When an issuer purchases another company. Depending on the structure of the corporate action, this could involve an exchange of shares or the issuance of new shares.

Buyback:

When an issuer buys shares back from its shareholders. This will reduce the number of shares outstanding.

Bankruptcy:

When an issuer is in financial distress and seeks protection from its creditors.

Dividend:

When an issuer distributes funds, stock or other assets to its shareholders. A dividend can be a one-time event or a reoccurring event.

Delisting:

When an issuer moves from a higher tier to a lower tier on a stock exchange or when the issuer is no longer a publicly traded issuer.

Liquidation:

After a bankruptcy has been filed, the issuer may be required to liquidate all assets to its debtors and/or shareholders. In some cases, the shareholders may be required to exchange the shares for the assets. After the liquidation has been processed, the issuer will no longer exist.

Merger:

When one or more issuers consolidate into one designated surviving issuer. There are several types of mergers. Each type will require all issuers involved to file with its State of Incorporation. Each state has its own requirements for each type of merger. Most mergers will also have a plan of merger that describes what will happen to all assets, debts, liabilities and shares. The shareholders will typically exchange any outstanding shares for new shares of the surviving company. The exchange ratio can vary depending on the type of merger and/or the plan of merger.  Below are a few types of mergers.

  • Acquisition: When an issuer purchases or is purchased by another issuer.

  • Reverse Merger: When a private issuer purchases a public issuer.

  • Triangular Merger: When an issuer (“Acquiring Issuer”), forms a subsidiary (“Subsidiary”), and it acquires another issuer (“Target Issuer”). The Target Issuer merges into the Subsidiary and the Target Issuer’s shares are exchanged into shares of the Acquiring Issuer.

Name Change:

When an issuer changes its name.

Spinoff:

When an issuer creates a new issuer and the shareholders are issued shares of the new issuer. The shareholders will become shareholders of both issuers.  

Forward Stock Split:

A forward stock split is when an issuer increases its outstanding share count at a certain rate, causing the stock price to reduce at a proportionate rate. Below are three ways an issuer can pay out the additional shares due to the split:

  • Payable upon surrender: Each certificate, book entry position, or shares held in a brokerage account will automatically be adjusted for the post-split share amount. Any certificates representing the pre-split share amounts are still valid and will be automatically adjusted when the certificate is presented to the transfer agent. The issuer must apply for a new CUSIP number to represent the post-split shares.

  • Mandatory and Payable upon surrender: Any pre-split shares must be presented to the transfer agent to be exchanged for post-split shares. The issuer must apply for a new CUSIP number to represent the post-split shares.

  • Payable like a dividend: The issuer will issue additional shares to each shareholder. If the presplit shares are held in a brokerage account, the broker will automatically adjust the account when it receives the additional shares from DTC. This type of even does not require a new CUSIP number.

Reverse Stock Split:

A reverse stock split is when an issuer decreases its outstanding share count at a certain rate, causing the stock price to increase at a proportionate rate. Below are two ways an issuer can pay out the post-split shares:

  • Payable upon surrender: Each certificate, book entry position, or shares held in a brokerage account will automatically be adjusted for the post-split share amount. Any certificates representing the pre-split share amounts are still valid and will be automatically adjusted when the certificate is presented to the transfer agent. The issuer must apply for a new CUSIP number to represent the post-split shares.

  • Mandatory and payable upon surrender: Any pre-split shares must be presented to the transfer agent to be exchanged into post-split shares. The issuer must apply for a new CUSIP number to represent the post-split shares. This helps industry professionals know if the shares are pre-split or post-split.

TENDER OFFER:

When an investor offers to purchase shares of existing shareholders at a certain price.

UPLISTING:

When a company whose stock is traded over the counter successfully lists its stock on a national exchange.