Consolidation The process by which a company changes the...

Consolidation

The process by which a company changes the structure of its share capital by reducing the number of shares it has in issue and increasing the par value of each. For instance, a company with 100,000,000 shares in issue having a nominal value of $0.001 (0.1c) might consolidate on a 1-for-10 (1:10) basis, reducing the number of shares to 10,000,000 (100m = 10:1 = 10m) and changing the nominal value to $0.01 (1c) (0.001 x 10 = 0.1). As a shareholder, the number of shares you own would be reduced, their nominal value would rise to compensate, and the market price of the shares should also rise to reflect the greater 'ownership' which each share represents in the company.