What is consolidation of shares?
Understanding Share Consolidation
What is Consolidation of Shares?
Consolidation of shares is a strategic move where companies reduce the number of outstanding shares by merging them and simultaneously increasing the face value of each share. This results in a decrease in the total number of outstanding shares, while the value of each individual share sees an increase.
Why Do Companies Consolidate Shares?
Companies choose to consolidate shares for various reasons, with a common motive being the desire to boost the per-share value of the stock. By reducing the total number of outstanding shares and increasing the value of each share, companies can make their shares more attractive to investors.
Another motivation for consolidating shares is to meet the requirements for listing on the stock exchange. Some stock exchanges have a minimum price threshold for listed stocks, and companies may opt for share consolidation to comply with these requirements.
For a more in-depth understanding of share consolidation and its implications.