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Overview
A corporate action is a change that a company makes that affects its investors by adjusting the organization's debt or equity structure. This can be a simple name change or a more complex event like a merger or a stock split. These changes can affect your portfolio, but Wealthsimple handles the processing of these events for you.
Corporate actions, such as stock splits, reverse stock splits, mergers, acquisitions, and dividends, typically take between 1 and 6 business days to process. In some cases, it can take a few extra business days to complete. During this time, your shares may appear as “inactive” before the new shares are added to your account.
We've enhanced the Activity feed to display corporate actions affecting your holdings, giving you clear visibility into automatic portfolio adjustments. You'll see a corporate action appear in your Activity feed with relevant details about the event, affected securities, and resulting changes to your portfolio.
How to view corporate actions in your account
To view corporate actions that have affected your account, follow these steps:
- Log in to the Wealthsimple app
- Tap the Activity tab at the bottom of the screen
- You'll see a full list of activities
- Tap the Filter icon in the top right corner to filter by accounts, type of activity (Corporate Actions), status, holdings, and timeframe
- Tap an activity to view its details
- Log in to your Wealthsimple profile
- Select Activity from the main menu
- You'll see a full list of activities
- On the right-hand side, you can Filter by accounts, type of activity (Corporate Actions), status, holdings, and timeframe
- Select an activity to view its details
The Activity feed will display a wide range of corporate actions. The most common corporate actions you can expect to see include the following:
- Stock splits
- Reverse stock splits
- Mergers
- Acquisitions
- Dividends
- Delisted or worthless securities
- Voluntary corporate actions
Some other corporate actions you might encounter include:
- Consolidations
- Demergers
- Internal reorganizations
- International code changes
- Listing status changes
- Liquidations
- Mandatory exchanges
- Purchase offers
- Push outs
- Return of capital
- Security swaps
- Spin offs
- Stock distributions
- Subdivisions
These corporate actions will appear in one of two formats:
- Hold and receive: You keep your existing securities and get additional securities or cash
- Submit and receive: Your existing securities are exchanged for different securities or cash
Stock splits and reverse stock splits
What is a stock split?
A stock split is a corporate action that increases the number of shares in a company while decreasing the share price proportionally.
For example, if you had one share of a stock priced at $10 and the company underwent a 10-for-1 stock split, you would get 10 new shares for every one share you held previously. As a result, you would hold 10 new shares worth $1 each.
What is a reverse stock split?
A reverse stock split (also known as a consolidation) is a corporate action that decreases the number of shares in a company while increasing the share price proportionally.
For example, if you held 10 shares of a stock priced at $1 per share for a total value of $10 and the company underwent a 1-for-10 reverse split, you would get one new share for every 10 shares you held previously. As a result, you would hold 1 new share worth $10.
What to expect with your holdings
Our internal operations team automatically processes stock splits and reverse stock splits, so you don't have to do anything. After the split, the number of shares you own will change, and the shares will trade at a new price.
If you end up with a partial share from a stock split, you can sell it just like a regular share. If you end up with a partial share from a reverse stock split, we'll automatically convert this partial share into cash, and you'll see the value added to the cash balance in your account.
Mergers and acquisitions
What is a merger?
A merger is when two separate companies join to form one new company, which usually adopts a new name and leaves the two original companies no longer in existence. Merger transactions usually don't require cash to take place.
During a merger, an exchange of shares takes place based on a set exchange ratio. An exchange ratio is the ratio at which the acquiring company offers its own shares in exchange for the target company's shares.
What is an acquisition?
An acquisition happens when one company (the acquiring company) buys most or all of another company's shares (the target company). This transaction is sometimes called a takeover and requires cash.
When this occurs, the share price of the target company may rise, and the share price of the acquiring company may drop, depending on how investors view the deal.
What to expect with your holdings
Our internal operations team processes all mandatory corporate actions, so no action is required on your end. Your shares will remain inactive in your portfolio until the merger or acquisition is complete, meaning you won't be able to sell them during this time.
Mergers and acquisitions don't have any tax implications for existing shareholders of the target company and the acquiring company.
Dividends
A dividend is a distribution of a company's profits to its shareholders. Dividends are typically paid out on a regular basis. Wealthsimple supports dividend stocks as long as they meet our eligibility criteria. You'll receive dividends in the cash balance of the self-directed investing account where you hold the stock. They're paid in the same currency as the account (CAD or USD).
The two important dates for dividend payment eligibility are the Record Date and the Pay Date.
- The Record Date is the day the company checks its records to identify its shareholders.
- The Pay Date is the day the company pays out the dividend to its shareholders.
To qualify for a dividend payment, any shares you purchase must settle in your account before or on the Record Date. Since all orders take 1 business day to settle, you should buy any shares 1 to 2 business days before the Record Date.
Dividend payments may appear in your Activity section before being posted to the cash balance of the investment account to which the dividend is paid. This is because we're waiting to receive funds from our depository first before paying out the dividend to your account.
Delisted or worthless securities
What are delisted or worthless securities?
Securities in your account may change status, becoming either delisted or worthless.
- Delisted securities are removed from major stock exchanges but may still have value and can often be traded over-the-counter (OTC).
- Worthless securities have little to no market value and usually can't be sold on any market.
A security can be delisted without being worthless, and a security can become worthless without being delisted.
Here are some important considerations about delisted and worthless securities:
- Cease Trade Orders (CTOs): If there's a CTO on the security in your province, you may not be able to remove it from your account.
- Tax implications: Removing or keeping a worthless security can affect your taxes. Consider seeking professional advice.
- Future value: There's a small chance a delisted security could regain value. Consider this before removing it from your account.
You can't buy additional shares of a delisted stock or ETF through our platform. If you own a delisted stock or ETF, you have the following options:
- Continue holding the shares in case the stock or ETF is eventually re-listed.
- Sell the shares if they're trading OTC by placing a limit sell order.
If you believe a stock or ETF in your account has become worthless, you have the following options:
- Remove the stock or ETF from your account.
- Keep the stock or ETF and potentially claim a loss on your taxes.
Removing a worthless security
To remove a worthless security, contact our support team to see if it's eligible for removal. If it is, you'll need to fill out a form to authorize the removal, which transfers ownership of the security to Wealthsimple Investments Inc. This removal will appear as a $0 sale on your tax slip, allowing you to claim it as a loss.
Keeping a worthless security
If you choose to keep the security, you may be able to claim a capital loss on your tax return under certain conditions. This applies if the company has gone bankrupt, been shut down by court order, or stopped doing business and the investment has no value.
Voluntary corporate actions
Some corporate actions are voluntary, which means that you won't participate in the corporate action by default. If you wish to participate, you can choose to opt in.
If you'd like to participate in a voluntary corporate action, we'd need to receive instructions that you wish to participate 5 business days before the deadline. There's also a processing fee of $50 plus sales tax, which must be available in your account.
To let us know that you wish to participate in a voluntary corporate action, please contact our support team.
Frequently asked questions
Can I track corporate actions on both web and the Wealthsimple app?
Yes, you can track corporate actions on both web and the Wealthsimple app.
Why can't I see a corporate action in my Activity feed?
Announcements for corporate actions are usually made before the event is processed. You'll see the activity item when Wealthsimple has finished processing the corporate action.
What happens if my securities become an over-the-counter (OTC) listing during a corporate action?
Some securities may move to an OTC listing during a corporate action, meaning that they're no longer listed on a formal exchange. We don't officially support OTC listings on Wealthsimple. Any corporate actions or listing changes involving OTC securities are executed on a best effort basis only.
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