Share Consolidation (Reverse Split)

A Share Consolidation, or Reverse Stock Split, is a corporate action where a company reduces its total number of outstanding shares by combining multiple existing shares into fewer new shares at a proportionally higher price per share. For example, a 1:5 reverse split converts every 5 shares into 1 new share, quintupling the price per share while leaving the total market capitalisation unchanged. Companies undertake reverse splits to increase share price (to meet exchange minimum listing requirements, attract institutional investors, or improve perceived credibility), reduce administrative costs associated with a very large number of low-priced shares, or exit the penny stock category. Unlike a forward stock split, reverse splits sometimes carry a negative signal — they can indicate financial distress or a struggling stock price.