Comment, question or quotation of the day

17-09-2021 : Quote of the day


"Managing risk means imagining futures". - Sylvestre Frézal, insurer

16-09-2021 : Question from a Facebook follower


"In a capital reduction, is it equivalent to carry it out by reducing the number of shares of the company or by reducing the value of the shares"?

 

Good morning,

In terms of the value of the company's equity, financial structure and the signal sent, the two techniques are equivalent. 

On the other hand, in terms of capital table, there is a big difference since the payment to all the shares of an identical sum representing a part of the share capital and reserves does not lead to a reduction in the number of shares, nor consequently to a modification of the shareholder structure. In the other technique, on the contrary, by reducing the number of shares of those bought by the company, the capital table of the company is modified, because some shareholders will sell all or part of their shares and others, by not selling any, will see their stake in the company increase.

 

Have a nice day.


"In a capital reduction, is it equivalent to carry it out by reducing the number of shares of the company or by reducing the value of the shares"?

 

Good morning,

In terms of the value of the company's equity, financial structure and the signal sent, the two techniques are equivalent. 

On the other hand, in terms of capital table, there is a big difference since the payment to all the shares of an identical sum representing a part of the share capital and reserves does not lead to a reduction in the number of shares, nor consequently to a modification of the shareholder structure. In the other technique, on the contrary, by reducing the number of shares of those bought by the company, the capital table of the company is modified, because some shareholders will sell all or part of their shares and others, by not selling any, will see their stake in the company increase.

 

Have a nice day.



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The Vernimmen.com Letter

Number 138 of July 2021

News : New listing methods

Statistics : Dividends and share buybacks on both sides of the Atlantic

Research : The internal capital markets: an alternative to bank credit in times of crisis

Q&A : A few questions and short answers

COMMENTS : Comments posted on Facebook