Strategic restructuring of your company’s share count to adjust stock price, address listing or tier requirements, and support market strategy.
For a public company, a stock split is more than just a mathematical adjustment—it is a useful tool for capital structure management. Whether you are executing a Reverse Split to increase your bid price for a NASDAQ uplisting or avoid an OTC downgrade, or a Forward Split to lower your stock price and attract a broader base of retail investors, the legal and regulatory steps need to be handled carefully.
At Ishimbayev Law Firm, we manage the entire lifecycle of stock splits for OTC and exchange-listed issuers. We help manage each step—from the initial board resolution to the final FINRA notification under Rule 6490—carefully to reduce the risk of FINRA issues, transfer-agent errors, and investor confusion.
Advising on optimal split ratios (e.g., 1-for-10 or 2-for-1) to achieve your specific goals, whether it is meeting the $0.05 OTCQB initial bid-price requirement or another applicable price target or managing authorized share counts.
Drafting the necessary Board of Directors resolutions, Stockholder consents, and Articles of Amendment required to legally authorize the split in your state of incorporation.
Managing the complex FINRA Corporate Action process, including the submission of the “Company Related Action” notice and helping address required fees, timing, and supporting information.
Working directly with your transfer agent and the Depository Trust Company (DTC) to help coordinate the adjustment of share counts and the issuance of new CUSIP numbers.
FINRA Rule 6490 gives FINRA authority to process or potentially decline to process a corporate action if there are material deficiencies. We proactively vet your company’s disclosures and corporate history to minimize the risk of FINRA “deficiency” letters that can delay the market effect of the corporate action.
A reverse split is often viewed as a last resort, but it can also be part of a broader capital-structure plan when used carefully. We help evaluate the ratio, timing, financing plans, and listing or tier requirements so the split is not treated as a purely mechanical step.
A mistake in a stock split can lead to “broken trades,” dividend errors, and significant cap table discrepancies. We provide the rigorous legal oversight needed to help make sure the corporate authorizations, transfer-agent mechanics, and shareholder communications are handled consistently.
If you are an SEC-reporting company, a stock split may require or support a Form 8-K or other public disclosure, depending on the issuer and the circumstances. We help evaluate and prepare the accompanying securities filings so the public record remains accurate throughout the transition.
A Reverse Split reduces the number of shares outstanding, which increases the price per share (often used to meet exchange listing requirements). A Forward Split increases the number of shares outstanding, which lowers the price per share (often used to make the stock more affordable for retail investors).
Rule 6490 requires OTC issuers to notify FINRA of certain corporate actions, including stock splits, at least 10 days before the applicable record date or effective date. FINRA must process the notification before the split can be reflected in the marketplace.
A split generally does not, by itself, change the total market value of the company or the proportional ownership of the shareholders (excluding fractional shares). It changes the share count and expected per-share price, although fractional-share treatment, market reaction, and trading dynamics can affect individual outcomes.
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