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Understand corporate actions & when to respond

Corporate actions can be voluntary or mandatory. See some examples of each.


  • Mandatory corporate actions are applied to your investment automatically.
  • Voluntary corporate actions require you to respond to the company's offer.
  • We'll contact you about voluntary corporate actions for securities you own in your Vanguard Brokerage Account.

Corporate actions


Say you own XYZ stock and the company decides to change its name.

It will issue a mandatory corporate action, which is basically an FYI telling you what it's doing. You don't need to do anything. The name change will automatically be applied to your investment.

Here are some examples of mandatory corporate actions:


On the other hand, your XYZ stock may issue a voluntary corporate action telling you about an optional dividend offer.

This action requires you to respond for the offer for it to be applied to your investment.

Here are some examples of voluntary corporate actions:

How Vanguard helps

We'll notify you of any upcoming voluntary corporate actions on investments in your Vanguard Brokerage Account.

If you want to participate, we'll process your response according to your directions.

Any open orders you have for the investment will be canceled during the time the corporate action is in effect.

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An investment that represents part ownership in a corporation. Each share of stock is a proportional stake in the corporation's assets and profits.

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CUSIP number

A unique 9-character code for each security approved for trading in the United States. It's supplied by the Committee on Uniform Securities Identification Procedures.

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Stock split

An increase in the number of a corporation's outstanding shares, often initiated to make shares affordable to more investors. The stock price per share will decrease; however, the proportionate equity in the company will remain the same. For example, ABC Company has 10 million shares outstanding, selling at $9 per share. ABC declares a 3-for-1 split. The company now has 30 million shares outstanding, selling at $3 per share. No monetary gain or loss results from a stock split.

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Callable security

A security that allows the issuer to repurchase or redeem it prior to its maturity date.

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ADR (American Depositary Receipt)

A certificate issued by a U.S. bank that represents one or more shares in a foreign stock. ADRs are denominated in U.S. dollars and traded on U.S. exchanges. They can be a cheaper and easier way to invest in individual international stocks.

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The distribution of the interest or income produced by a mutual fund's holdings to the fund's shareholders, or a payment of cash or stock from a company's earnings to each stockholder. Dividends can be distributed monthly, quarterly, semiannually, or annually.

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Tender offer

An offer to buy all or some of shareholders' shares or securities. The price may be higher, or at a premium, in comparison to the market price.

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Bond consent

A request from a bond's issuer to change the terms of the bond agreement with the bond holders.

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Odd-lot tender offer

An offer by a company to purchase shares of its stock from investors who hold less than 100 shares.

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Open order

An order to buy or sell a stock that hasn't yet been executed or canceled.