Title: Maryland Proposal to Amend Certificate: Reducing Par Value, Increasing Authorized Common Stock, and Reverse Stock Split Introduction: In Maryland, a proposal to amend a certificate involves modifying certain aspects of a company's organizational documents. This article will explore the concept of Maryland proposals to amend certificates, specifically focusing on reducing par value, increasing authorized common stock, and implementing a reverse stock split. It will also touch upon the different types and variations of these proposals, highlighting their significance in corporate decision-making. 1. Overview of a Maryland Proposal to Amend Certificate: A Maryland proposal to amend a certificate refers to the formal request made by a company to change specific provisions in its articles of incorporation or by-laws. These proposals require shareholder approval and aim to reflect the evolving needs and circumstances of the organization. 2. Reducing Par Value: — Definition: A proposal to reduce the par value involves decreasing the nominal value assigned to each share of common stock. — Purpose: Companies may choose to reduce par value to increase the liquidity of their shares, readjust capital structure, or enhance trading opportunities. — Procedure: The proposal is included in the company's proxy statement and voted upon during a shareholder meeting. If approved, the amended certificate is filed with the Maryland Department of Assessments and Taxation. 3. Increasing Authorized Common Stock: — Definition: An increase in authorized common stock refers to raising the limit on the number of shares a company can issue. — Purpose: Companies may require additional authorized shares to facilitate potential acquisitions, mergers, employee stock ownership plans (Sops), or to meet financing needs. — Procedure: The proposal is presented to shareholders, who vote on the increase during a general meeting. If approved, the amended certificate is filed with the Maryland Department of Assessments and Taxation. 4. Reverse Stock Split: — Definition: A reverse stock split involves consolidating a company's existing shares, resulting in a lower number of shares outstanding, but with a proportionally higher value. — Purpose: Companies may opt for a reverse stock split to increase the stock price, regain compliance with stock exchange listing requirements, or discourage speculative trading. — Procedure: The proposal is presented to shareholders, who vote on the reverse stock split during a general meeting. If approved, the amended certificate is filed with the Maryland Department of Assessments and Taxation. Types and Variations of Maryland Proposals to Amend Certificates: — Sole Proprietorship Conversion: Proposing to change a company's legal structure to a sole proprietorship. — Name Change: Proposing to modify the legal name of the corporation to better align with its strategic direction or branding. — Articles Consolidation: Proposing to merge multiple articles of incorporation into a single, unified document. — Preferred Stock Authorization: Proposing to add or expand provisions related to the issuance of preferred stock. — Director or Officer Liability Limitation: Proposing to limit the liability of directors or officers within the organization. Conclusion: Maryland proposals to amend certificates allow companies to adapt to changing circumstances, streamline operations, and achieve specific corporate objectives. By reducing par value, increasing authorized common stock, and implementing reverse stock splits, companies can enhance their financial flexibility, attract investors, and position themselves for future growth. It is essential for shareholders to review and approve these proposals with careful consideration as they shape the future direction of the company.
Maryland Proposal to amend certificate to reduce par value, increase authorized common stock and reverse stock split with Exhibit
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The number of outstanding shares of Common Stock will be decreased as a result of a Reverse Stock Split, but the number of authorized shares of Common Stock will not be so decreased.
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.
Reverse splits are neutral. Technically, it permits a business to issue additional stock. Reverse splits increase the number of outstanding shares, which may dilute the stock price. Market capitalization is affected, not assets or profits (and, therefore, capitalization ratio).
Will the ticker symbols or CUSIP numbers change? The ticker symbol of a fund undergoing a forward split or reverse split does not change. However, a new CUSIP number will be issued for a fund undergoing a reverse split.
Reverse stock splits are proposed by company management and are subject to consent from the shareholders through their voting rights.
Reverse stock splits work the same way as regular stock splits but in reverse. A reverse split takes multiple shares from investors and replaces them with fewer shares. The new share price is proportionally higher, leaving the total market value of the company unchanged.
In the example of a 2-for-1 split, the share price will be halved. Thus, while a stock split increases the number of outstanding shares and proportionally lowers the share price, the company's market capitalization remains unchanged.
Section 242 of the DGCL governs the procedures by which a corporation may amend its certificate of corporation, or charter, and generally requires approval by (a) the board of directors and (b) holders of a majority in voting power of the outstanding stock entitled to vote thereon and by the holders of a majority in ...