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Why Sub Division/Splitting of shares is Made?


Nidhi Jain (CS )     30 June 2011

Nidhi Jain
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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))     30 June 2011

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

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Nidhi Jain (CS )     30 June 2011

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how increase the interest of small shareholder

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

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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.

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

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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.

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Nidhi Jain (CS )     01 July 2011

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Thanks Vikash.

It means after splitting mkt price also divide into proportion of splitting.

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Vikash Kumar (Manager Accounts (CA. Final))     01 July 2011

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Yes, after splitting mkt price of share also divide into proportion of splitting.

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