Frequently Asked Questions
Corporate Actions
What is a reverse stock split?
As the name suggests, in a reverse stock split, instead of lowering the price of each share, the price increases while the total number of outstanding shares decrease. This is also known as a share consolidation. A reverse split does not affect the total value or the market capitalisation of the stock.
A company may conduct a reverse stock split in order to increase their stock price. One reason may be to meet listing requirements or to raise interest in the stock due to higher prices. However, reverse stock splits are often viewed negatively as it might be seen as a sign of struggle to maintain financially.
Here is a simple example of a reverse stock split: Company A has undergone a 1 for 5 reverse stock split, which means that shareholders have received one share of the new stock for every 5 shares that they previously owned. If the shareholder had originally owned 5000 shares before the reverse stock split, they would now own 1000 shares after completion of the reverse split.
If the share price was originally US$1, which means that the shareholder had a total share value of US$5000, after the reverse split, they would still have a total share value of US$5000 with each share being worth US$5.
Other faq that might help you
- What are corporate actions?
- What is a stock/share split?
- What are dividends?
- What is a rights issue?
- Where can I find the list of corporate actions taken by companies listed on SGX?
- How much are the dividend charges?
- How much are the corporate action charges?
- What effect do corporate actions have on prices?
- What is fractional share?
- What is Cash in Lieu (CIL)?
- What will happen to the fractional share/CIL resulting from corporate action?
- Why does Phillip Securities go cheque-free?
- How do I receive my SGD cash balances from my Cash Trading account?
- How do I apply for EPS service?
- What happens when Phillip Securities goes cheque-free and I do not sign up for EPS/Giro service for my Cash Trading account?
- What is the fee for withdrawal of cash balance from my Cash Trading Account?
- How do I log in to submit my corporate action instructions?
- Will I receive a confirmation notification on the completed submission from Phillip Securities Pte Ltd?
- Can I amend my Corporate Action Event response if I have a change in mind after submitting?
- Is there an option to create a standing instruction?
- How do I cancel the standing instruction I have submitted?
- Will I receive any notification when a Corporate Action that required my attention is posted?
- What will happen if I miss the Closing Date for instruction submission for the corporate action event?
Did this answer your question?
