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Dejour Energy Inc. Message Board

  • iamafoolru12smom iamafoolru12smom May 10, 2013 3:27 PM Flag

    Reverse Stock Splits- some info

    A company’s board of directors may declare a reverse stock split without shareholder approval. Although the SEC has authority over a broad range of corporate activity, state corporate law and a company’s articles of incorporation and by-laws govern reverse stock splits.

    If a company is required to file reports with the SEC, it may notify its shareholders of a reverse stock split on Forms 8-K, 10-Q and 10-K.

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    • From wikipedia

      There is a stigma attached to doing a reverse stock split, so it is not initiated without very good reason and may take a shareholder or board meeting for consent. Many institutional investors and mutual funds, for example, have rules against purchasing a stock whose price is below some minimum, perhaps US$5.[citation needed] In an extreme case, a company whose share price has dropped so low that it is in danger of being delisted from its stock exchange, might use a reverse stock split to increase its share price. For these reasons, a reverse stock split is often an indication that a company is in financial trouble

 
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