Reverse Split - Why companies reverse split their shares

A Company may try to

* Avoid becoming a so called "penny stock"

* Avoid being delisted due to stock exchange's minimum share price rules

* Make their stock look more valuable

* Avoid huge volatility in terms of percentage point share price change

* Make itself better comparable with its peergroup

Effects:

A reverse split will result in all shareholders holding fewer shares in the company. However, the STAKE in the nominal value of the company per share will remain the same (the share's portion in the share capital). The nominal value per share will increase. Each new consolidated share will carry the same rights as the pre-reverse-split shares (including voting rights and dividend entitlements).

Preconditions:

A reverse split requires Shareholder approval at an Annual General Meeting pursuant to the Board's proposal. The proposal includes a resolution on a change in the articles of association with regards to the highest and lowest number of shares that may be issued.