Monday, June 8, 2015

Share consolidations announced following the introduction of the Minimum Trading Price on SGX Mainboard

Following the introduction of the S$ 0.20 Minimum Trading Price on SGX Mainboard, SGX expects many Issuers to meet this requirement by announcing share consolidations. To date there have been more than 60 announcements made, mostly by Issuers with a December 2014 year end, a second group with June 2015 year ends is likely to follow later this calendar year.

Share Consolidation, also known as “Reverse Stock Split”, is an exercise undertaken by the company to reduce the total number of shares in issue while simultaneously increasing the price of each share. After this exercise, investors will own fewer but proportionately higher priced shares due to the reduction in the number of shares in issue. Share consolidation has no effect on the value of the investor’s overall shareholdings relative to the total market valuation of the company.
SGX wants you to be aware of the following information that could be relevant for you:
1. The standard procedure for share consolidations
2. Where and how to trade odd lots
3. Where to find more information about announced share consolidations

1. Share consolidation procedure
SGX Mainboard Issuer publishes several announcements in relation to the proposed share consolidation. The final announcement, after shareholder approval has been obtained, will contain the dates that trading in the existing trading counter will cease and the share consolidation will be effectuated. The announcement will mention 2 dates; the ex-date and the record date.

  • The ex-date is the date on which a security will be traded with price adjusted for post consolidation using a new stock code.
  • On the record date, the adjusted post-consolidated shareholdings are calculated and adjusted in accordance with the distribution ratio using the investor’s CDP holdings. The CDP account will reflect the adjusted total holdings of the consolidated shares on the next business day. The holdings will be automatically moved to the new stock code by SGX CDP

2. Odd lots
Share consolidations could result in an investor owning odd lots, e.g. 1250 shares. SGX recommends the investor to trade the standard board lots in the standard trading counter (1200 shares) in the Ready Market and only to trade the odd lots (50 shares) only in the Unit Share Market.

3. Corporate announcements

  • All corporate actions announced to date including the Ex-Date and Record Date (go to > Company Information > Corporate Action > Select Year = 2015 and Category = Entitle)
  • All company announcements including those that have announced a share consolidation however not the formal dates (go to > Company Information > Company Announcements > select Announcement period = Last 6 Months, Announcement category = Corporate Action, Share consolidation)
  • Click here will direct you to SGX web page for Corporate Action