What is a Reverse Stock Split/Consolidation of Shares?
Reverse Stock Split/Consolidation of Shares is a corporate action wherein a company reduces the number of shares traded on the stock exchanges by combining shares.
- You will be eligible for these shares if you purchased the stocks before the ex-date (for it to be settled in your demat account by the record date).
- The number of shares in the market reduces after consolidation.
- The face value of shares and share price increases in proportion to the consolidation.
Important dates during a Reverse Stock Split/Consolidation of Shares:
For example, Svarnim Trade Udyog announces a share consolidation of 1:10. That is, every 10 shares held by an investor will be reduced to 1. If Ms. Keerthy holds 5000 shares, she will hold 500 shares post-consolidation.
|Declaration Date: 11th Feb||The day the share consolidation is announced to the public.|
|Ex-Date: 1st June|
To be eligible to receive reverse-split shares, purchases must be made on or before 31st May.
Investors who purchase shares on or after the ex-date will not be eligible to receive the reverse-split shares.
|Record Date: 1st June||All shareholders of Svarnim Trade Udyog as per company records on 1st June will receive reverse-split shares in the given ratio (1:10).|
|Credit Date||The day the consolidated shares reflect in the demat accounts of investors. |
Since we have shifted to the T+1 settlement cycle, the ex-date and record date for corporate actions fall on the same day.