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a) Mandatory Corporate ActionsCorporate actions can either be Mandatory, Mandatory with an Option and Voluntary.

All shareholders are required or mandated to participate in these corporate actions. In this case, shareholders have no choice to participate or influence the timing of the event.
Examples include cash dividend, stock splits, etc. In the case of cash dividends, all shareholders are entitled to receive the dividend payments.

b) Mandatory Corporate Action with Option
Although the corporate action is mandatory, shareholders are given a chance to choose among several options e.g. a cash or stock dividend option with one of the options as default.
The shareholders have an option of receiving dividends in cash or as further units of the same security (dividend in specie). In case the shareholder does not make a choice, the default option will automatically apply.

c) Voluntary Corporate Actions
Shareholders have the right to decide whether they want to accept a proposed corporate action or reject it. If the investors choose not to take action, their securities will remain unaffected. Examples include rights issues, takeovers etc.

Purpose of Corporate Actions

Companies undertake corporate actions with the primary intention of:
a) Rewarding shareholders through
Distribution of income through cash dividends, or
Issuance of additional shares in the form of stock dividends or bonus issues among others.

b) Influencing the share price – The aim is either to increase or decrease the number of outstanding shares and ultimately increase or decrease the share prices e.g. a share buyback will influence the share prices as the company buys back shares from the market in an attempt to reduce the number of outstanding shares.

c) Corporate Restructuring – the aim is to increase the company’s profit levels. e.g. through mergers or consolidations.
Thus, through corporate actions, shareholders are given an opportunity to receive a benefit or participate in the re-organisation of the company.