Shareholders to vote on stock split at AGM slated for January 24

Durrant Pate/Contributor

The board of directors of Jamaica’s lone cinema company, Palace Amusement, is recommending a stock spit as a means of attracting the investing public to trade in its shares.

The board took the decision at its meeting last week and is putting a resolution to the company’s annual general meeting (AGM), slated for January 24, for shareholders to vote on the proposed stock split. A stock split happens when a company increases the number of its shares to boost the stock’s liquidity. 

For example, after a 2-for-1 split, each investor will own double the number of shares and each share will be worth half as much. A stock split is usually done when there is possibly a low supply of shares in the market, or the price has become ‘expensive’ to investors which might see reducing or limited trading activity.

Stock split resolutions

The board has drafted two resolutions, which, if approved, will effect a stock split. The first resolution authorises that Palace Amusement’s share capital be increased from 1,500,000 shares to an unlimited number of shares by the creation of an unlimited number of ordinary shares with the existing shares in issue.

The second resolution mandates that each of the issued ordinary shares in the capital of the company be sub-divided into 600 ordinary shares with effect from the close of business on February 28, 2023. This will result in the total issued share capital of the company being increased from 1,437,028 ordinary shares to 862,216,800 ordinary shares.

At present, the top 10 shareholders in Palace Amusement owns 1,280,924 shares or 89.14 per cent. This is the smallest number of shares for any listed security on the Jamaica Stock Exchange (JSE).

Palace has been listed on the JSE since July 12, 1973. Palace shares peaked at J$2,900 in November 2019 making it the most expensive equity on the stock market at that time.

Since then, the stock has lost value, trading well below J$1,000. Infact news of the impending stock split two weeks ago sent stock price up 30 per cent J$620 to J$808.57, its biggest one-day increase in 2022.

During yesterday’s trading the stock price advanced by J$254.91 to close at J$1,425.94 with 767 stocks exchanging hands.