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Corporate actions

What is a corporate action (or event)?

It’s activity that materially changes an organisation and impacts its stakeholders and shareholders. These events are normally approved by the company's board of directors. Sometimes shareholders are permitted to vote on some events and some corporate actions require shareholders to submit a response.

Examples of corporate events include; stock splits, dividends, mergers and acquisitions, rights issues, and spin-offs.

How do I find out about corporate actions?

Where possible, we’ll notify you as and when these happen on your investments. Log into your Share Dealing account and select ‘Account Management’ and then ‘Important Notifications’.

If you have a question regarding corporate events please read the below before contacting us as we’ve included the answers to questions you ask us the most.

If you have any questions on the Rolls Royce rights issue please check our FAQs.

1. Tender Offers & Dutch Auctions

  • A Tender Offer is a cash offer to all shareholders for their shares. Often this is used when a company wants to buy back some of their own shares. The company will usually be looking to buy back a certain number of their shares and will ask shareholders if they would like to offer their shares for tender. This may be at a fixed price or it may be at a price calculated by the company’s net asset value on a given date.

    A Dutch Auction gives shareholders the option to choose a price at which to tender their shares within a range. The company will then look at the offers and set a ‘strike price’ (an agreed price for the company to buy shares from the shareholder). Everybody who has offered their shares on or below this price will have tendered their shares. All shareholders will receive the strike price even if their original offer was lower than this.

    The number of shares that can be tendered will vary. There may be a set number which are guaranteed to be tendered, known as the basic entitlement. You may be able to offer more shares, however your offer may be scaled back depending on how many people have decided to participate. In the case where a strike price is set, a lower original offer is more likely to be completed in full.

2. Rights Issues

Watch our video to learn more about Rights Issues.

  • When a rights issue takes place, shareholders are given the option to purchase additional shares at a discounted price.

    If you choose take up these rights then you'll be allocated new shares on receipt of your payment and completion of the event. These shares will become ordinary shares and will be tradeable at the current market price.

  • By not taking up the rights you will not lose any shares, rights are offered by a company at a discounted price in addition to your existing shares.

    Please note: while you won’t lose any existing shares your share holding will become more diluted as there will be more shares on a stock market.

  • When a company announces a rights issue, holders of the stock will be issued ‘nil paid rights’ which each represent a ‘right’ to buy a new share.

    As these ‘nil paid rights’ are tradable on the stock market, they are apportioned a value using the book cost of your total share holding.

    If you choose to take up your ‘rights’ and purchase additional shares, the new shares will be given a book cost which includes both the discounted offer price you paid and the stock market value of the nil paid rights.

    • Key dates

    When will you take payment?

    We will take the payment by 11th November 2020.

    When will I get my new shares?

    You should receive your new shares on or around 12th November 2020.

    Watch our video to learn more about Rights Issues

    When will I get my new shares?

    You should receive your new shares on or around 12th November 2020.

    • Why can’t I elect on the Rolls Royce Rights Issue anymore ?

    Our advice date has now passed and due to the time it takes to process the requests we’re not able to accept any late elections.

    • Why is your deadline for elections before the registrars deadline?

    Our closing date is earlier than the registrars because we need time to process all of the elections and send them to the registrars before their closing date.

    • Can I still sell my Rolls Royce Nil Paid Rights ?

    We can no longer take orders to sell your Nil Paid Rights, our last day for trading these was 6th November 2020. If you have not elected in the event you may get lapsed proceeds in due course.

    • When will you take payment for my new shares ?

    We will process your election shortly after the deadline (11:59 PM on the 8th November 2020) and will take the payment by 11th November 2020. Please make sure you have enough money in your account to cover this payment. If you don’t have enough money in your account to take up the offer, we’ll take up the maximum number of shares possible with the money you have available.

    • I can see Rolls Royce stock in my account that says “Fully Paid Entitlement” what is this?

    After we process your election we will remove the Nil Paid Rights and replace with an entitlement line of stock. This will be replaced with your new Rolls Royce Ordinary shares when we add them to your account.

    • When will I get my new Rolls Royce Ordinary shares ?

    You should receive your new shares on or around 12th November 2020.

    • When will I get any lapsed proceeds for my Nil Paid Rights ?

    We cannot give you a timescale for this. If there are any lapsed proceeds due we will pay them to your account when we receive them.

    • Why has my Rolls Royce Ordinary shares book cost changed?

    As a result of the Rights Issue the book cost of your underlying ordinary shares is adjusted to take into account the new Nil Paid rights in your account. This means we split into a book cost for your ordinary shares and a book cost for your Nil Paid rights.

    If you have taken up your rights, we add the book cost for your Nil Paid rights plus the 32p you’ve paid to take up your Rights back to the book cost for your ordinary shares.

    If you have sold your Nil Paid rights or have let them lapse, the book cost allocated to them will be removed when the Nil Paid rights are removed from your account.

3. De-listing or stock suspension

  • This means that the company is proposing to cancel or has cancelled the listing of its shares on the stock market.

    We will contact you by email or letter with further details if this happens to any of your investments.

    Please note: we do not send out communications when a company’s stock is suspended however, if we receive any information such as a notice of administration then we will contact you.

4. Takeovers

  • Takeovers are reliant on shareholders accepting an offer by a bidding company. The offer will usually consist of money and/or shares in their company in exchange for your existing shares. The company will need to reach a pre-agreed percentage of total shareholders to agree to their offer before they can declare their takeover bid as 'unconditional in all respects’.

    I had accepted the offer before it was 'unconditional in all respects'

    If you agreed before the offer was declared ‘unconditional in all respects’, you will receive your cash 10 working days from when we instruct the company's registrars.

    Please note: for each acceptance we combine your instructions with those of other customers so it will be approximately 10 working days from the advice date of the event.

    I did not accept the offer

    Once the offer is declared 'unconditional in all respects' we will write out to you and give you the opportunity to agree to the terms of the takeover.

    If you agree to the terms of the takeover you will usually receive the money within ten working days from the date we receive your instruction. This money will be transferred into your share dealing account.

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5. Stock splits

  • A company may decide to split its stock into new shares to increase its liquidity on the market, this usually happens when the share price is very high and makes it harder for smaller investors to buy into the company. Companies will usually use a 2-for-1 or 3-for-1 ratio which means for every share you had before you would receive 2 or 3 shares.

  • The stock split will not add any value to your holding as the share price will decrease to accommodate the additional shares. Your valuation will still be based on the number of shares you own and the current market price.

Halifax Share Dealing Limited. Registered in England and Wales no. 3195646. Registered Office: Trinity Road, Halifax, West Yorkshire, HX1 2RG. Authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN under registration number 183332. A Member of the London Stock Exchange and an HM Revenue & Customs Approved ISA Manager.