SGX: Share Consolidations Scheduled For This Week

OREANDA-NEWS. Theoretically, share consolidation reduces the number of shares outstanding while increasing the price of the stock, thereby maintaining its market value. Hence by reducing the number of shares on issue tenfold, the company would expect to see the stock price rise 10 times, all other things remaining equal.

Eight companies listed on Singapore Exchange (SGX)– Advanced Integrated Manufacturing Corp, AEM Holdings, Changtian Plastic & Chemical, Lafe Corporation, Plastoform Holdings, Li Heng Chemical Fibre Technologies, STAR Pharmaceutical, and Yongnam Holdings have announced that they will be doing Share Consolidations this week.

Shares in the stock of Changtian Plastic & Chemical went ex yesterday, while Advanced Integrated Manufacturing Corp., and Li Heng Chemical Fibre Technologies will go ex today.  

Change Management

Please note that on the day the share consolidation goes ex, the shares will be consolidated and begin trading at the new price. Meanwhile the share consolidation will only be reflected in CDP accounts after the record date of the share consolidation. As an example,  if an investor is buying or selling shares on the ex-date or 2 days after the ex-date, their initial trade note will document the new price and the new number of post-share consolidation shares.  In case the investor wants to sell his shares before the effective date (record date + 1 business day) he has to take into account that as of the ex-date he actually owns less shares than reflected in the CDP statement (if the statement shows 1000 shares and the company announced a 10 for 1 share consolidation, the investor owns 100 shares as of the ex-date.  Please approach your broker for more clarity about how to calculate your actual shareholdings.

Hence, the process for a Share Consolidation is as follows; the CDP holdings change will only become effective after the record date.

The ex-date is the date on which a security will be traded with its price adjusted for the consolidation including a new stock code for the consolidated shares.

Record Date

The record date is the date on which the shareholders CDP account holdings are used to calculate the new shareholdings after the share consolidation. The investor’s CDP account will reflect the new total holdings of the consolidated shares on the record date + one business day. The holdings will be automatically moved to the new stock code by SGX CDP

The eight companies with share consolidations taking place this week are as follows: