In an article published in Capital Aberto, our lawyer Luiz Pompeu discusses stock splits and reverse stock splits, which are common practices in the stock market.

Matheus explains that, in the first case, the company splits each share into two or more shares, which reduces its unit price. In the second case, two or more shares are combined into one, resulting in an increase in their price.

“Neither operation alters the market capitalisation of the companies or the equity of the shareholders and their respective participation in the share capital, since the same proportion between the number of shares to be split or grouped and their new price after the operation is maintained. In other words, in a split operation, for example, where each share becomes two, the number of shares doubles, while their price is reduced by half, so that the final balance remains unchanged.”

Check out the full analysis on the Capital Aberto website.