What is meant by Consolidation ?

  • A consolidation is an Exchange of existing shares for a fewer number of the same share type with an increase in the nominal value per share maintaining the company’s overall share capital. This means that although your shareholding is reduced, you do not lose any value as the market price of the shares will increase accordingly.
  • A company would issue a consolidation (reverse stock split) to increase the share price because they feel it would be more marketable at a higher price. The nominal value of each share is adjusted to maintain an equal total share capital as before the consolidation. The new shares are issued free of all charges to shareholders. On the effective date of the consolidation the price per share is adjusted to take into account the reduced number of shares in issue.

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