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Corporate Action & Special Notation: Investors Must Know!

Corporate action and special notation are provisions made by the Indonesia Stock Exchange (IDX) to regulate the dynamics in the structure of listed companies (issuer). It is important for an investor to understand these two things so as not to make the wrong investment choice.


The following is a description of corporate actions and special notations that can help investors in making investment decisions.


Corporate action & special notation

Corporate Action


Corporate actions are actions of listed companies that can directly affect investors' shareholdings. Therefore, shareholders should closely monitor, update information related to the issuer, and analyze the potential impact of corporate actions on their investment strategies and portfolios.


Some Examples of Corporate Action


  • Stock Split: A stock split aims to increase the number of shares in circulation and lower the price per share. This action is beneficial to investors as the shares become more affordable, but the valuation is the same.


  • Reverse Stock Split: A merger of shares in circulation so that there are fewer shares and their price rises proportionally. Issuers usually take this action to keep their share price within the listing requirements of the stock exchange.


  • Stock Buyback: Listed companies buy back a number of publicly-owned shares to improve financial ratios, maintain stock liquidity, or prepare capital reserves.


  • Stock Dividend: The distribution of company profits to investors in the form of cash or shares with an amount that has been determined at the General Meeting of Shareholders (GMS).


  • Bonus Share: Free gift of shares to investors from retained earnings, share capital, or other elements of equity.


  • Partial Delisting: Withdrawal or delisting of some shares from the exchange for specific purposes, such as cost savings and corporate privacy controls.


Special Notation


Meanwhile, special notation is a letter symbol added behind the issuer code when the company is in poor condition. Investors can quickly find out the condition of listed companies that they want to buy or already have shares in.


Special notations are also often referred to as "tattoos" from the stock exchange. It is not permanent and will disappear when the obstacles that the issuer faces are resolved.


Some Examples of Special Notation


  • B: Bankruptcy filing against the company.


  • M: Moratorium of debt payment


  • E: Negative equity.


  • S: No sales based on latest financial report.


  • A: Adverse opinion of the audited financial report.


  • C: Lawsuit against listed company, its subsidiary, or member of board of directors and commissioners which has material impact.


  • F / G / V: Administrative sanction from the Financial Services Authority (OJK) due to minor / moderate / serious offense.


  • X: Listed on the Watchlist Board (the listed companies experience a number of fundamental and trading liquidity constraints simultaneously).


There are 17 special notations that can be seen in full through the official IDX website.


 

Disclaimer: The content is made for educational purposes, not a recommendation to buy or sell a particular stock. PT KAF Sekuritas Indonesia is licensed and supervised by the Financial Services Authority (OJK).



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