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Why Sub Division/Splitting of shares is Made?

Nidhi Jain (CS ) (987 Points)

30 June 2011

Can anyone tell why sub division is made and what its impact on share capital & prices of shares ???????????

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Vikash Kumar (Manager Accounts (CA. Final)) (694 Points)
Replied 30 June 2011

To increase the interest of samll investor & daily trading volume of share.

Nidhi Jain (CS ) (987 Points)
Replied 30 June 2011

how increase the interest of small shareholder

Vikash Kumar (Manager Accounts (CA. Final)) (694 Points)
Replied 30 June 2011

Example: Currently market price of 1 of share of OMDC (Orissa Minerals, FV-Rs.10) is Rs.60,000/-, we need Rs.60,000/- to buy one share of OMDC. if it split share of fv of rs.10 to fv of rs.1 each than we need Rs.6,000/- (Rs.60000/10) to buy one share, which a small investor can afford.

Vikash Kumar (Manager Accounts (CA. Final)) (694 Points)
Replied 30 June 2011

HDFC bank is going to split its share from fv of Rs.10 to Rs.2 each. Current Market price is Rs.2500/- each. On record date one share will converted into FV of Rs.2 each and Market price will 1/5 of record date.