Corporate Actions, Dividends & Governance

Acquisition

One company obtaining control of another by buying its shares or assets, with the target continuing to exist.

Test: the acquirer obtains control, defined in India as 25% of voting rights or the right to appoint a majority of directors qualitative

Adjusted Price

A historical price restated to account for corporate actions, so that a price series is comparable over time.

Adjustment Factor for a bonus or split = 1 / (New Shares per Old Share); historical prices are multiplied by the cumulative factor ₹

Corporate Actions, Dividends & Governance

Annual General Meeting

The yearly meeting at which shareholders approve accounts, declare final dividends and elect directors.

Test: held within six months of the financial year end and no more than fifteen months after the previous one qualitative

Corporate Actions, Dividends & Governance

Annual Report

A company's yearly publication containing its audited financial statements, directors' report and governance disclosures.

Test: the document contains the audited accounts, board report, management discussion and analysis, and the corporate governance report qualitative

Corporate Actions, Dividends & Governance

Associate Company

A company in which another holds significant influence but not control, typically 20% or more of voting power.

Test: the investor holds at least 20% of voting power or has significant influence without control; accounted for by the equity method qualitative

Corporate Actions, Dividends & Governance

Audit Committee

A board committee, composed mainly of independent directors, that oversees financial reporting, internal controls and the auditors.

Test: the committee has a majority of independent directors, an independent chair, and members with financial literacy qualitative

Corporate Actions, Dividends & Governance

Board of Directors

The body elected by shareholders to direct a company's management and safeguard shareholder interests.

Test: directors are appointed by shareholders and owe fiduciary duties to the company under the Companies Act qualitative

Corporate Actions, Dividends & Governance

Bonus Issue

The issue of additional free shares to existing shareholders, funded by capitalising reserves.

New Share Count = Old Count x (1 + Bonus Ratio); Adjusted Price = Old Price / (1 + Bonus Ratio) shares

Corporate Actions, Dividends & Governance

Capital Reduction

A court-approved reduction of a company's share capital, by cancelling shares or returning capital to shareholders.

Test: approved by special resolution and confirmed by the National Company Law Tribunal, with creditor objections heard ₹ crore

Corporate Actions, Dividends & Governance

Corporate Action

Any event initiated by a company that changes its securities or affects its shareholders' holdings.

Test: the event alters the number, value, or form of the shares held, or distributes something to holders on a record date qualitative

Corporate Actions, Dividends & Governance

Corporate Governance

The system of rules and practices by which a company is directed and held accountable to its shareholders.

Test: independent board oversight, transparent disclosure, fair treatment of minority shareholders, and effective audit and risk functions qualitative

Corporate Actions, Dividends & Governance

Delisting

The removal of a company's shares from trading on a stock exchange.

Test: the security is no longer admitted to dealings on the exchange, whether at the company's initiative or the exchange's qualitative

Corporate Actions, Dividends & Governance

Demerger

The separation of a business division into an independent company, with shares issued to the existing shareholders.

Test: an undertaking transfers to a resulting company, whose shares are issued to the demerged company's shareholders in proportion to their holdings qualitative

Corporate Actions, Dividends & Governance

Dividend

A distribution of a company's profits to its shareholders, paid in cash out of distributable reserves.

Total Dividend Paid = Dividend per Share x Number of Shares Outstanding ₹

Corporate Actions, Dividends & Governance

Dividend Payout Ratio

The proportion of a company's earnings distributed to shareholders as dividends.

Dividend Payout Ratio = Dividend per Share / Earnings per Share x 100 %

Corporate Actions, Dividends & Governance

Dividend per Share

The total dividend declared for a period divided by the number of shares outstanding.

Dividend per Share = Total Dividend Declared / Number of Shares Outstanding ₹

Corporate Actions, Dividends & Governance

Dividend Trap

A share whose high dividend yield reflects a falling price and an unsustainable payout rather than attractive income.

Test: the yield is elevated because the price fell, and the dividend exceeds free cash flow or is funded by borrowing qualitative

Corporate Actions, Dividends & Governance

Dividend Yield

The annual dividend per share expressed as a percentage of the share price.

Dividend Yield = Annual Dividend per Share / Market Price per Share x 100 %

Corporate Actions, Dividends & Governance

E-Voting

Electronic voting on shareholder resolutions, mandatory for listed companies in India.

Test: the company provides a remote electronic voting facility open for a stated period before the meeting qualitative

Corporate Actions, Dividends & Governance

Employee Stock Option

A right granted to an employee to buy company shares at a preset price after a vesting period.

Perquisite Value on Exercise = (Fair Market Value on Exercise Date - Exercise Price) x Number of Options Exercised ₹

Corporate Actions, Dividends & Governance

Ex-Dividend Date

The first day a share trades without entitlement to a declared dividend.

Theoretical Ex-Dividend Price = Cum-Dividend Price - Dividend per Share ₹

Corporate Actions, Dividends & Governance

Extraordinary General Meeting

Any general meeting of shareholders other than the annual general meeting, called to decide urgent business.

Test: the meeting is convened by the board, or on requisition by members holding at least one-tenth of the paid-up capital carrying voting rights qualitative

Corporate Actions, Dividends & Governance

Final Dividend

A dividend recommended by the board after the year's accounts are prepared and approved by shareholders at the annual general meeting.

Test: the dividend is recommended with the annual results and requires an ordinary resolution at the annual general meeting ₹

Corporate Actions, Dividends & Governance

Holding Company

A company whose principal assets are controlling stakes in other companies rather than an operating business of its own.

Test: the company controls the composition of another company's board or holds more than half its voting power qualitative