Mergers, stock splits, and more
A corporate action is any activity a company takes that affects shareholders and results in a significant change to the company's stock.
Our Corporate Actions team is committed to making sure the changes that come with corporate actions are seamless for our customers.
We process mandatory corporate actions, including stock splits, mergers, and spinoffs. For mandatory corporate actions, we’ll make sure the necessary adjustments are made in a timely manner according to the details provided by the company undergoing the corporate action.
We also accept orders to participate in voluntary corporate actions like tender offers or buy-backs and rights offerings. This allows shareholders to choose to participate or not in the event. The company can’t act without the shareholder’s response.
If you have specific questions about the terms of a corporate action, like why it’s happening, reach out to the company’s Investor Relations.
We’ll temporarily prevent you from trading the affected stock while the Corporate Actions team works to process these changes.
You can stay up to date with recent corporate actions by checking out our Corporate actions tracker, which is a curated list of the most relevant corporate actions on Robinhood.
A company performs a stock split to increase or decrease the number of shares it has in the market.
When a company decides to execute a forward stock split, it increases the number of outstanding shares in the company by issuing new shares to existing shareholders in a fixed proportion. The price of each share decreases in the same proportion, so there is no change in the shareholders’ equity or the total value of the company’s shares.
The number of shares you own in the company will increase, while the price of each individual share will decrease proportionally.
When a corporation executes a reverse stock split, each outstanding share of the company is converted into a fraction of a share and the stock price per share increases in the same proportion. There is no change in the shareholder’s equity or the total value of the company’s shares.
The number of shares you own in the company will decrease, while the price of each individual share will increase proportionally.
Most reverse splits retain fractional shares post split. Cash in Lieu is paid out typically within 3-4 weeks after the reverse stock split.
Sometimes a company will choose to acquire another company. The buying corporation may choose to perform a cash merger and liquidation, a stock merger, or a cash and stock merger.
When a company decides to execute a forward stock split, it increases the number of outstanding shares in the company by issuing new shares to existing shareholders in a fixed proportion. The price of each share decreases in the same proportion, so there is no change in the shareholders’ equity or the total value of the company’s shares.
The number of shares you own in the company will increase, while the price of each individual share will decrease proportionally.
When a corporation executes a reverse stock split, each outstanding share of the company is converted into a fraction of a share and the stock price per share increases in the same proportion. There is no change in the shareholder’s equity or the total value of the company’s shares.
The number of shares you own in the company will decrease, while the price of each individual share will increase proportionally.
Most reverse splits retain fractional shares post split. Cash in Lieu is paid out typically within 3-4 weeks after the reverse stock split.
Let’s say XYZ buys out Y Corp:
Let’s say XYZ buys out Y Corp:
A cash and stock merger simply means the buying company gives the shareholders of the acquired company shares of the buying company and a cash payout.
Sometimes a company will choose to create a new, independent company under its umbrella. The original company may choose to issue shares of the new independent company to the original company’s shareholders.
After a stock split, extra shares may be left over, which are known as fractional shares.
A fractional share is a share of equity that is less than the value of 1 full share. Companies have a few options when dealing with fractional shares that result from a corporate action, such as:
You own 10 shares of XYZ, and XYZ undergoes a 1:3 reverse stock split. You’ll now own 3.33 shares of XYZ.
Handling of fractional shares that result from corporate actions are predetermined by the company performing the corporate action, and can be found on the company’s corresponding SEC Form 8-K.
Round-up is a share payment made to owners of fractional shares that result from corporate actions. You can expect round-up payments to settle in your Robinhood investing account about 3-4 weeks after the corporate action has been completed.
You can either have a round-up that’s at the participant level or the beneficial holder level. Only the beneficial holder level of round-ups will issue round-up shares to individual holders.
Cash-in-lieu is a cash payment made to owners of fractional shares that result from corporate actions. The cash rate is predetermined by the company performing the corporate action or the price we are able to sell in the market. You can expect cash-in-lieu payments to settle in your Robinhood investing account about 3-4 weeks after the corporate action has been completed. You’ll find confirmation of this payment in your monthly investing account statements.
Robinhood typically issues fractional shares instead of paying cash-in-lieu.
Delisting refers to a stock’s removal from an exchange or that it’s no longer trading on any market, including OTC markets. Oftentimes when we refer to a stock’s delisting, we mean that it’s been removed from a major exchange and it now trades on the OTC markets.
The issuing company performing the corporate action decides the terms of the offer. As a shareholder, you’ll get the offer materials and instructions through email.The materials will outline the terms of the event and provide important information, such as the expiration date.
If you'd like to participate, you can make your election directly through the website for the corporate action, which should be listed in the email. Or contact us with the following information and our team can help process your election:
Note that instructions must be submitted prior to the broker’s expiration date, which is provided in the event correspondence.
A tender offer invites existing shareholders to tender or sell their shares. Basically, a tender offer is a conditional offer for the company to buy back your shares of the stock. The company making the offer is willing to buy your stock at a predetermined price if you tender them.
Let’s say XYZ has a current stock price of $10 per share. The company presents shareholders with the offer to tender their shares for $12 per share. You can choose to sell your shares back for $12, or just hold on to them with the expectation they're worth more than $12 per share. You’re not obligated to take any action, which is why a tender offer is considered a voluntary corporate action.
To participate, follow the directions in the email and make your election through the voluntary election site.
A warrant is an asset that allows its owner to buy stock in the company that issued the warrant at a fixed price, called the exercise or subscription price. Warrants are usually issued for a longer term, with an expiration date several years in the future.
Let’s say XYZ issues warrants to buy 10 shares of their stock at a $10 strike price and you own one of the warrants. Then 5 years after you receive the warrant, XYZ stock is trading at $20 in the market. You could exercise your warrant and buy your 10 shares at the $10 strike price instead of the $20 market price.
When a company plans to offer new shares of stock to the public, sometimes they’ll issue a rights offering. A rights offering gives existing shareholders an opportunity to purchase shares of the new stocks at a specific price before those shares are offered to the rest of the public. Rights have an expiration date and are issued for a short time only.
Rights are usually issued in proportion to the number of shares you currently hold.
Let’s say you currently hold 100 shares in XYZ, you’ll likely be issued 100 rights. This can differ depending on the specific terms of the corporate action. Participation in a rights offering is voluntary.
If you'd like to participate, contact us with the following information and our team will help process your offer:
If you'd like to participate, contact us with the following information and our team will help process your warrant:
Contingent value rights (CVR) and Escrow CUSIPs are rights given to you as a customer who owns shares of a company that’s facing restructuring or a buyout. These rights ensure that you as a shareholder receive certain benefits if a specific event occurs like an acquisition. CVRs/Escrows usually have an expiration date after which the benefits will no longer apply.
Corporate action and proxy voting communications are serviced by Say Technologies, LLC on behalf of Robinhood Securities, LLC. Say Technologies, LLC provides technology services for shareholder engagement and communication and is not a broker-dealer, investment adviser, tax adviser, or legal adviser. Say Technologies, LLC is a subsidiary of Robinhood Markets, Inc.
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