This is the TimeToTrade help wiki. Use the TimeToTrade Trigger Trading Technology™ to execute your trades when Price, Candle Stick, Trend Line, Volume and Technical Analysis chart conditions are met - no coding required. Trade directly in the world’s global markets. Backtest your Trading Strategies. Calculate your UK HMRC Capital Gains Tax liabilities. Manage your Investment Club.
Under the UK Companies Act, a share must have a par or nominal value, e.g. 100 pence ordinary share. Authorised capital is the nominal or par value of the maximum number of shares the company may issue without seeking further shareholder approval.
A company can increase the number of shares already in issue by for example decreasing the par value from 100 pence to 25 pence through a process referred to as 'share splits'. Typically the reason companies carry out share splits is to improve the liquidity of a share if the share price is considered too expensive.
Alternatively a share consolidation or reverse share split can be used to increase the value of the share. Share consolidations are used as a means of making a share more attractive to institutional investors who consider penny shares too volatile. For example, if a company with 25 pence shares has a one for four consolidation, the par value would rise to 100 pence. The number of ordinary shares issued would fall to one quarter of the previous level, and the share price, earnings per share and dividends per share would rise by a factor of four but the P/E ratio and yield would be unchanged.
The implications of a share split or consolidation are:
- For a share split the number of shares that you own are increased and for a reverse share split or consolidation the number of shares that you own are decreased, however the total value of your shareholding remains constant. For example if you own 1,000 ordinary shares in Company ABC plc which were trading at 500 pence before a 2:1 share split (two for one share split i.e. for every one share you own, you get two shares), after the split you would own 2,000 ordinary shares worth 250 pence each.
- The market price of the shares is re-adjusted in proportion to the split. For example if a share was trading at 800 pence and there was a 4:1 share split, the re-adjusted price would be one quarter of the original price, therefore 200 pence. Alternatively if there was a reverse share split a share trading at 25 pence before a 1:10 split would have a re-adjusted share price of 250 pence
- Per Share ratios such as Earnings per share, Dividends and Asset values per share are restated in proportion to the split, however a split does not affect for example P/E ratios, yield and market capitalisation.
- There would be no financial impact on the company, other than administration fees, because there are no cash flow changes involved in executing a share split.
- If a stock split results in fractional shares the fractional share is typically sold off either to the benefit of the company or as cash paid to the investor. For example if you own 100 shares currently trading at 10 pence, if there is a 1:3 reverse split after the split you would receive 33 shares with a re-adjusted value of 30 pence plus a fractional one third of a share. The fractional share would typically be sold at a value of 10 pence i.e. 1/3 of 30 pence.
- The split / consolidation are treated as a share reorganisation for capital gains tax purposes, with the base cost of the existing shares apportioned between the new shares. The new share issue is not treated as an accquisition and the loss/alteration of existing shares is not treated as a disposal.
Managing Share Splits & Consolidations using timetotrade
timetotrade's portfolio management tools include a Share Reorganisation wizard. Just input the share split and timetotrade will automatically update your portfolio and make the necessary adjustments to your base cost for Capital Gains Tax calculations.
To enter a share reorganisation into timetotrade, follow the general instructions defined on the Share Reorganisation page. This section discusses how to enter specific details relating to share split and consolidation entries.
When managing share splits or consolidations you are typically told the ratio of old to new shares, or the number of news share received as a result of a split, or the number of shares cancelled (removed) as a result of a share consolidation.
You can use timetotrade to either enter the ratio of old to new shares such as a 3:1 split or a 7:9 consolidation as illustrated:
Alternatively you can enter the number of shares received or cancelled by entering a positive number (e.g. "300") or negative number (e.g. -"300") into the shares issued text box as illustrated:
Typically Fractional Shares are not issued or cancelled when reorganising UK companies. If fractional shares are not received leave the default 'Fractional Shares' drop down menu at 'No' as in "No fractional shares were received". Alternatively if you did receive fractional shares, change the fractional shares drop down menu to 'Yes'. Sometimes after a consolidation investors may receive a fractional cash payment in lieu of fractional shares. Any fractional share payment should be entered into the cash received text box in UK Pounds, Euro, US Dollars and not pence or cents. The following screen shot provides an example of a 7:9 consolidation with £2.50 cash received from the sale of a fractional share:
It has never been easier to execute your trading strategy. Our Trigger Trading Technology ® means you can now automatically execute your trades directly in the world’s global markets.
You need never miss a trading opportunity again!
Do you want to:
- buy when your technical analysis chart conditions are met? Really buy, not just get an email or sms alert?
- or sell when a support trend line is broken?
- or back-test your strategy going back as far as 30 years?
TimeToTrade's Trigger Trading Technology™ is truly game changing. It gives you a trading advantage. The power to take your trading to a new level.
Open a FREE TimeToTrade account today to:
- Trade UK, US and European Shares - apply now
- Execute trades when your Price, Candlestick, Trend Line, Volume and Technical Analysis chart conditions are met using the Trigger Trading Technology® - learn more - help video
- Email and SMS Trigger Trading™ Alerts - learn more
- Trade Off The Chart - learn more
- Back Test Trading Strategies with up to 30 years of historical data - learn more
- Create Simulated Trading Accounts to test your Trigger Trading™ Strategies - learn more
- Real time Forex, UK, European and US stock market data - learn more
- 170+ Technical Analysis and Candlestick Pattern Indicators - learn more
- All the tools you need to set up and run a successful investment club - learn more
- Manage your Portfolio and calculate UK HMRC Capital Gains liabilities and SA 108 CGT Tax Returns - learn more
- Create Trading Competitions for you and your friends - learn more
- Apply for a trading account today to get the Live Account Features - apply now
Apply now to try our superb platform and get your trading advantage.
The information and data provided is for educational and informational purposes only. Interpretation and use of the information and data provided is at the user's own risk. All information and data on this website is obtained from sources believed to be accurate and reliable. However, errors or omissions are possible due to human and/or mechanical error. All information and data is provided "as is" without warranty of any kind. We make no representations as to the accuracy, completeness, or timeliness of the information and data on this site and we reserve the right, in its sole discretion and without any obligation, to change, make improvements to, or correct any errors or omissions in any portion of the services at any times. Past performance is not a guarantee of future results. Trading carries a high level of risk to your capital and can result in losses that exceed your deposits. It may not be suitable for everyone so please ensure you fully understand the risks involved.
All services are provided by Mercor Index Ltd. TimeToTrade is a trading name of Mercor Index Ltd (a company registered in England and Wales under number 9479466). Our Registered address is 1st Floor, Aldermary House, 10-15 Queen Street, London, EC4N 1TX. Mercor Index Ltd is authorised and regulated by the Financial Conduct Authority number 679941.
The trading services offered by Mercor Index Ltd are not available to residents of the United States and are not intended for the use of any person in any country where such services would be contrary to local laws or regulations. Subscriptions to TimeToTrade products are available if you are not eligible for trading services.