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What happens after an RV?


Scott McD
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Does anybody have any idea what is likely to happen to share prices and the number of shares offered by a company on the ISX after any RV??

Many existing ISX companies have billions of shares out there at a couple of Dinar each….

If, hypothetically, it RV’s at 1:1, these companies would almost automatically become the most valuable in the world…. there has to be some ISX adjustment at RV time?

Any ideas what could happen?

Cheers,

S

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Does anybody have any idea what is likely to happen to share prices and the number of shares offered by a company on the ISX after any RV??

Many existing ISX companies have billions of shares out there at a couple of Dinar each….

If, hypothetically, it RV’s at 1:1, these companies would almost automatically become the most valuable in the world…. there has to be some ISX adjustment at RV time?

Any ideas what could happen?

Cheers,

S

No they will not. The value of the company will not change to any great extent. Only 'cash items' items in the accounts can be adjusted by changes in the exchange rate, everything else would be treated on a 'historical cost' basis. Capital and shares are not considered 'cash items'

A company currently with a share capital of 100 billion dinar would have to restate the accounts and the share capital would become 100 million dinar.(assuming par). The number of issued shares would be reduced from 100 billion to 100 million, under Iraq company law share nominal value is one dinar. Shareholdings would be reduced by a factor of 1000, share price would remain the same so effectively shareholdings would retain the same value.

There is the possibility that they may reduce the nominal value, Kuwait operates on 100 fils, so if they were to follow Kuwait, shareholdings would be reduced by a factor of 100.

This is why the ISX is such an important cog in the wheel and why the 1 to 1 would be the simplest option in respect of a revaluation.

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No they will not. The value of the company will not change to any great extent. Only 'cash items' items in the accounts can be adjusted by changes in the exchange rate, everything else would be treated on a 'historical cost' basis. Capital and shares are not considered 'cash items'

A company currently with a share capital of 100 billion dinar would have to restate the accounts and the share capital would become 100 million dinar.(assuming par). The number of issued shares would be reduced from 100 billion to 100 million, under Iraq company law share nominal value is one dinar. Shareholdings would be reduced by a factor of 1000, share price would remain the same so effectively shareholdings would retain the same value.

There is the possibility that they may reduce the nominal value, Kuwait operates on 100 fils, so if they were to follow Kuwait, shareholdings would be reduced by a factor of 100.

This is why the ISX is such an important cog in the wheel and why the 1 to 1 would be the simplest option in respect of a revaluation.

Ah...got ya Sandyf....that helps me understand, many thanks.

I knew someone out there would know the answer.

Cheers,

S

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