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You will get all that the information that you desire and in fact more. So why are you wasting time, read on to get all your queries answered and all your problems solved? In this article we will not only deal with the meaning of stock split but also will explain each and every aspect of the stock split in way that will enable you to understand it better.
The term stock split is also known as stock divide. It is a method or mechanism that enables the companies to increase their share holdings. But the method of stock split is applicable to the public limited company only and it cannot be adopted by a private limited company. The prices of each share do not remain the same as earlier and thus are affected by the stock split or stock divide. The prices of the newly issued shares are to be adjusted in a way that the market capitalization of the respective companies are in no way affected by this stock split or stock divide. The stock split is some what similar to the process of right issue of shares. In fact it differs from the right issue only in respect of the market capitalization which is to remain unaffected at all circumstances. Here we will define stock split.
About the shareholders
Just like right issue in the stock split too the stocks are allotted to the existing shareholders of the company only. The shareholders are offered new shares in the proportion of the their earlier share holdings in the company, for example the company may decide to issue 3 shares to the existing shareholders for every 2 shares held. The decision of stock split is made by the Board of Directors though it needs approval from 1/3rd majority shareholders. It is a conclusion arrived at by the mutual consent of the Board of Directors in the general meeting of the company. Such a decision to increase the shares of the company is taken when the company has certain out standings towards the stock exchanges in the stock market. As such a decision to increase the share capital of the company becomes inevitable. You should get to know about the features, the significance, the advantages and the disadvantages of the stock split in details.
Strive for excellence
From the above discussion you have just come about the basics of the stock split but there are a lot more to learn about it. In today’s highly competitive world it is very difficult to keep pace with the changes that are taking place in the world around us. In order to be successful in our respective fields we have to strive for excellence. It has thus become essential especial in the fields of finance and investment that we have knowledge of expertise nature. Specialization in any particular field is no more the key word of success. Today to be successful you need to be an all rounder. All rounder in the sense that you have to have managerial skills as well as communication skill; you will need to have leadership qualities and traits and at the same time possess the decision making power as well; you need to be charismatic and at the same time be a strict autocrat too. To be successful in today’s world you will have to prove your worth. It is also important that you get some nifty shares from the market.
Get some research
It is very important to get some good research on the market. But it is not all that easy to be an all rounder especially in the finance and investment sector because the demands of the jobs keep changing every other day. There is severe cut throat competition among companies in these fields, each trying to improve over the other. There is also online stock trading where you can try your luck. And to be an all rounder under such circumstances is next to impossible. The competition now has taken an ugly shape. Survival of the best seems to be the new tag line that the companies are adopting. You can now define stock split to all the novice investors.
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