Corporate Action Terms
Dilution
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An increase in the number of outstanding shares that reduces each existing shareholder’s percentage ownership.
Why it matters
New shares may raise useful capital, but existing investors may own a smaller portion of the company afterward.
Example
If outstanding shares rise from 100 million to 125 million, an investor who buys no additional shares owns a smaller percentage.
Corporate Action Terms
FOO — Follow-on Offering
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A public offering of additional shares by a company that is already listed on a stock exchange.
Why it matters
A follow-on offering can raise additional capital for the company and may increase the number of shares outstanding, which can affect existing shareholders through dilution.
Example
A listed company may sell additional shares through a follow-on offering to fund expansion, acquisitions, or other corporate needs.
Corporate Action Terms
Rights Offering
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An offer allowing existing shareholders to buy newly issued shares, usually in proportion to their current holdings.
Why it matters
Shareholders may need to decide whether to participate, sell the rights when possible, or accept possible ownership dilution.
Corporate Action Terms
Share Buyback
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A company’s purchase of its own shares from the market.
Why it matters
A buyback can reduce outstanding shares, but investors should also consider the price paid and the company’s alternative uses of cash.
Corporate Action Terms
SRO — Stock Rights Offering
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An offer that gives existing shareholders the right to buy additional shares, usually at a specified price and according to an entitlement ratio.
Why it matters
A stock rights offering allows existing shareholders to participate in a company's capital raising and may help them maintain their proportional ownership if they exercise their rights.
Example
If the entitlement ratio is 1 new share for every 5 shares owned, an investor holding 5,000 shares may be entitled to subscribe to 1,000 new shares.
