Voluntary Corporate Actions

Voluntary corporate actions are where the investor gets to choose what action to take when a company announces a corporate action on a security. All of these events include a deadline to give the company a decision.  Here is a list of examples of voluntary corporate actions:

Optional dividend - the shareholder is receiving a dividend on a stock or fund and can instruct the company whether to receive cash or additional shares of the security. 

Tender offer - the company or a potential buyer is offering cash to shareholders or bondholders to sell their shares to the buying entity. This can be at a fixed price, a price to be determined, or a range of prices where the company buys only the shares at or below a price within a bid range (a dutch auction tender offer).

Rights offer - the company gives shareholders the option to buy additional shares, often at a discount to market price.

Exchange offer - a form of tender offer that involves exchanging currently owned shares for shares of a new security instead of cash. This may be due to a proposed stock merger or by an issuer looking to replace existing debt (bonds) that pay a higher interest rate with a lower interest rate obligation.

Consent offer - typically featured on bonds (see Proxy Voting page for stocks) where the issuer is looking to effect a change requiring the approval by a certain number of bondholders. An incentive payment is often offered to consenting holders.

Other examples of voluntary corporate actions include conversions, redemptions, warrant exercises, and bankruptcy ballots.