Kentucky Proposal to amend certificate of incorporation to effectuate a one for ten reverse stock split
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How to fill out Proposal To Amend Certificate Of Incorporation To Effectuate A One For Ten Reverse Stock Split?
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FAQ
A reverse stock split does not directly impact a company's value (only its stock price). It can signal a company in distress since it raises the value of otherwise low-priced shares. Remaining relevant and avoiding being delisted are the most common reasons for corporations to pursue this strategy.
Listing Rule 5250(b)(4) will require companies to provide public notice of a reverse split, using a Reg FD-compliant method, no later than p.m. ET at least two business days prior to the proposed market effective date.
When a company completes a reverse stock split, each outstanding share of the company is converted into a fraction of a share. For example, if a company declares a one for ten reverse stock split, every ten shares that you own will be converted into a single share.
Simply divide the number of shares you own by the split ratio and multiply the pre-split share price by the same amount. For instance, say a stock trades at $1 per share and the company does a 1-for-10 reverse split.
The negative connotation associated with such an act is often self-defeating as the stock is subject to renewed selling pressure. Reverse stock splits are proposed by company management and are subject to consent from the shareholders through their voting rights.
The holder of an option contract will have the same number of contracts at a reduced (1.33) strike price. The option contract now represents 133 shares per contract. A reverse split results in the reduction of outstanding shares and an increase in the price of the underlying security.
It's important to note, especially for new investors, that stock splits don't make a company's shares any better of a buy than prior to the split. Of course, the stock is then cheaper, but after a split the share of company ownership is less than pre-split.
The other statements are true. If there is a reverse stock split, the market price per share will be increased and the number of outstanding shares will be reduced.