Shares Missing From Mplus Global After Stock Split
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First, you need to understand the difference between a stock split and a reverse stock split. A regular stock split divides shares into more units, while a reverse stock split, also known as stock consolidation, is when the existing large number of share units are combined into a smaller number.
Above is an example of a US-listed company or stock. You can see the S symbol at the bottom right, indicating that a share split corporate exercise has taken place.
Bon Natural Life Limited (BON) is a Nasdaq-listed biotechnology company headquartered in Xi''an, China. The company is involved in the research, development, manufacture, and sale of natural active ingredients used in health foods, personal care, cosmetics, and pharmaceuticals. Key products include health drink powders, bioactive food ingredients, and botanical fragrance compounds.
What Is a Share Split and Reverse Stock Split?
- Share Split: A process where a company increases the number of outstanding shares by dividing each existing share into several new shares. This is typically done to lower the share price, making it more affordable for retail investors.
- Reverse Stock Split: A process where a company reduces the number of outstanding shares by combining several existing shares into one new share. This is usually aimed at increasing the share price, particularly to meet the minimum price requirement on stock exchanges like Nasdaq.
Reverse Stock Split BON: Details and Purpose
On 19 May 2025, BON executed a 1-for-25 reverse stock split. This means every 25 existing BON shares were combined into 1 new share. No fractional shares were issued; all fractions were rounded up. This move affected all shareholders uniformly without changing their percentage of equity ownership in the company.
Main purposes of this reverse split:
- To ensure BON''s share price remains above USD 1.00, the minimum requirement to stay listed on Nasdaq.
- To avoid the risk of being delisted from Nasdaq due to an excessively low share price.
Capital structure changes:
- Authorised share capital increased to 1 billion Class A shares, 50 million Class B shares, and 50 million preference shares.
- The conversion ratio of Class B to Class A shares changed from 1:1 to 1:25 to maintain the balance of shareholder rights.
Implications of Reverse Stock Split for Investors
| Before Split | After Split |
|---|---|
| 25 BON shares | 1 BON share |
| Low share price | Share price rises 25 times |
| Large number of shares | Reduced number of shares |
| Investment value unchanged | Investment value unchanged |
- No change in investment value: Although the number of shares decreases, the share price increases proportionally, so the overall investment value does not change directly.
- The main purpose is technical: A reverse split does not resolve fundamental business issues but is merely to comply with exchange requirements.
- Future risks: A large increase in authorised shares could lead to dilution if the company issues new shares in the future.
Latest Developments for BON
- BON recorded a share price surge of over 56% recently, driven by the announcement of strategic partnerships and new product launches in the health market.
- The company signed an exclusive agreement worth USD 32 million for postbiotic ingredients with Beijing Huahai Keyuan, and introduced innovative products in the healthy sleep and blood sugar management segments.
Conclusion
BON''s reverse stock split is a corporate action to maintain its Nasdaq listing status by raising the share price through share consolidation. It does not affect the value of your existing investment. If the number of units you purchased previously is less than the consolidation ratio, Mplus will liquidate and return the cash value to your trust account.
Frequently Asked Questions (FAQ)
Why have my shares disappeared from my Mplus portfolio after a stock split?
If your number of share units is less than the consolidation ratio (for example, fewer than 25 units for a 25:1 ratio), the units are insufficient to be converted. Mplus will liquidate them and return the cash value to your trust account within a few days to one month.
What is the difference between a stock split and a reverse stock split?
A stock split divides shares into more units at a lower price per unit. A reverse stock split does the opposite, combining several units into one unit at a higher price. Neither changes the overall value of your investment.
Does a reverse stock split mean the company is in financial trouble?
Not necessarily. Reverse stock splits are often carried out to meet the minimum listing price requirement on exchanges like Nasdaq. However, it can be a sign that the company''s share price has fallen too low, and investors should closely monitor the company''s fundamental performance.
How do I contact Mplus if my shares are missing after a stock split?
You can contact the Mplus Global Central Dealer at +60322012012 to enquire about your share status and the process of returning the cash value to your trust account.
Understanding the mechanics of stock splits and reverse stock splits is important to avoid panic when changes occur in your portfolio. Keep building your investment knowledge to become a smarter investor.
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