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Stock ownership 101

By
Hannah Glenn
December 13, 2017
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When you invest with Swell, you’re investing in a collection of companies.

But not just any, ones that we’ve deemed both ethical in practice and poised for success. By investing, you become part owner of these companies, which is pretty cool. As a shareholder, you have a say in running the business.

Unlike many other advisers, we believe that you should be empowered to vote in corporate actions of the companies in which you invest – stockholder activism is a crucial part of socially responsible investing. Here are some terms you’ll need to know:

Proxy

A proxy is a written document that allows a shareholder to vote without attending a company meeting. If you receive a proxy statement, you will be notified by email.

Stock dividend

A stock dividend occurs when a corporation pays a dividend in security rather than cash. The day the dividend is paid, the stock dividend will be added to your total share value.

Optional dividend

With an optional dividend, the corporation gives its shareholders the option of receiving the payment in cash, security, or some combination of both.

Stock split

When a stock splits, a corporation increases its outstanding shares. As a result, the share prices usually decrease. If you own security in a corporation that authorizes a split, you will be notified by email. The number of shares you own will be adjusted on the date the split goes into effect.

Reverse stock split

When a reverse stock split occurs, a corporation is decreasing its outstanding shares. As a result, the price per share usually increases. If you own security in a corporation that authorizes a reverse split, you will be notified via email. The number of shares you own will be adjusted on the date the split takes effect.

Merger/restructure

A merger occurs when two or more companies combine to form one company. A restructuring occurs when a company internally reorganizes, possibly dividing into separate companies. If a merger or corporate restructuring applies to a security you own, you will be notified by email. If a ticker symbol changes, we will automatically update your holdings. Similarly, if any shares are exchanged, we will automatically make the adjustment.

Rights offering

A rights offering occurs when a publicly traded company gives its current stockholders the right to maintain proportionate ownership before offering new shares to the public. For example, assume you own 2% of a company's outstanding shares. The company decides to issue new shares and issues a rights offering. You are given the right to purchase 2% of the new shares before they are offered to the general public.

Tender offer

A tender offer is an offer to buy shares of one security in exchange for shares of another security, cash, or a combination of both.

Class action

A class action is a lawsuit filed against a company on behalf of its shareholders. In nearly all classes, your legal right to seek a remedy on your own will be taken away unless you take action and opt-out of the class action.

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