§ 188 Stock Split Definition

This rule explains what a “stock split” means – it’s when a company cuts its existing shares into more pieces of the same kind.

Key Takeaways

•A stock split divides all outstanding shares into a larger number of shares of the same class.
•It is done by amending the company’s articles, not by giving out extra shares as a dividend.
•The total ownership stays the same; each share’s price usually drops proportionally.

Example

A company has 1,000 shares of its common stock. It decides to do a 2‑for‑1 split, so each old share becomes two new shares. After the split there are 2,000 shares, each worth about half of what the old shares were worth.

The company changed its articles to say every share is now divided into more shares, but they’re still the same type of share. No new shares are given as a dividend; it’s just a split of the existing ones.

“Stock split” means the pro rata division, otherwise than by a share dividend, of all the outstanding shares of a class into a greater number of shares of the same class by an amendment to the articles stating the effect on outstanding shares. (Added by Stats. 1975, Ch. 682.)

This rule explains what a “stock split” means – it’s when a company cuts its existing shares into more pieces of the same kind.

Key Takeaways

•A stock split divides all outstanding shares into a larger number of shares of the same class.
•It is done by amending the company’s articles, not by giving out extra shares as a dividend.
•The total ownership stays the same; each share’s price usually drops proportionally.

Key Takeaways

Example

Key Terms

References

§ 188 Stock Split Definition

Key Takeaways

Example

Key Terms

References

Key Takeaways

Example

Key Terms

Related Statutes

References

Key Takeaways

Example

Key Terms

Related Statutes

References