News
Changes in Euroclear’s regulations affect the ability to carry out a reverse stock split
For companies listed on an MTF platform (i.e., First North, Spotlight, or NGM Nordic SME), it is time to consider conducting a reverse stock split (so-called consolidation of shares) during the fall of 2024.
The possibility to execute such a split will, in principle, disappear entirely after the turn of the year. (Read more about it here: https://setterwalls.se/artikel/minskade-mojligheter-till-omvand-split-av-aktier-som-foljd-av-andringar-i-euroclears-regelverk/ )
A consolidation of shares may be advantageous for companies with a low stock price that includes many decimal places, and therefore a large number of outstanding shares. By consolidating the shares, a more appropriate share price can be achieved, and trading may be facilitated.
Some advantages of carrying out a reverse stock split/consolidation of shares:
- It can facilitate trading in the stock (some banks cannot place orders with stock prices that have more than three decimal places)
- The marketplace has certain requirements (the stock price cannot be too low)
- In rights issues, the price cannot have more than two decimal places in Euroclear
The process, in short, is as follows:
- Nordic Issuing coordinates the timeline and the number of guarantee shares needed for rounding up
- The company convenes a general meeting to decide on the consolidation of shares
- Registration of the meeting’s decision at the Swedish Companies Registration Office
- Once the registration is completed, Nordic Issuing ensures that the shares are consolidated in Euroclear
Want to know more? Don’t hesitate to contact Nordic Issuing.
