Reverse stock split
The reverse stock split (even par value increase ; Engl .: reverse split or stock split down ) is the opposite of a share split and the measure of a corporation which the number of issued shares reduced, whereby the market price of the remaining shares increases accordingly.
backgrounds
A stock split must be resolved at the general meeting. On the one hand, a stock consolidation is of a psychological nature, since nothing changes in the ownership structure and the total value of the stock corporation. The share price rises in price without changing the company's equity .
On the other hand, there may be good reasons that make a stock consolidation necessary: If the shares of a company are traded at very low market prices, more precisely below the nominal value of the shares (so-called penny stocks ), the German Stock Corporation Act prohibits new shares from being acquired issue, as new shares may not be issued below the nominal value of the old shares.
The unification of preferred and common shares into a single share category common shares can also take place in the form of a stock split. Alternatively, the preference shares can also be converted into ordinary shares, with a mostly relative conversion in order to establish the equivalence of preference and shares.
Technical implementation
In the technical implementation, the previous shares in the case of nominal value shares are withdrawn and replaced by shares with a higher nominal value but the same WKN or ISIN . In the case of no-par shares , however, only the articles of association of the stock corporation will be adjusted accordingly and the number of shares in the shareholders' accounts will be reduced.
presentation
After the merger, automatically created charts are adjusted as if the share always had the new denomination, so that no jump in the price trend is visible. Otherwise, a viewer or software could falsely assume that the price would have developed in the context of increased purchases due to economic changes, which in turn could lead to wrong decisions.