A share split is also commonly referred to as a stock split. It is usually done for commercial reasons. Usually, when the price of a share is restrictively high, the company may decide to break up or split that share into multiple smaller shares. For example, instead of 1 share being priced at $100, the company may want to split that one share into 4 shares of $25 each.

As seen in the example above, the share split merely creates more shares without altering the total value of the shares held. Hence, to many, this is a mere cosmetic change. However, the lowering of the price of one share has the effect of creating the perception that the share is “cheap”. It also allows investors with a lower budget per share to enter the market. While on the surface this looks cosmetic, the true intended effect in most cases is to improve the liquidity of the company. A lower price would most possibly result in higher demand from investors, all else being equal. All this is done without affecting the company’s underlying value.


How to perform a share split

Firstly the company will need to decide on the share split ratio. In the case of the previous example whereby 1 share worth $100 was split into 4 shares of $25 each, that would be a 4 to 1 split. This means that if a shareholder was holding on to 1 share, he would then be holding on to 4 shares as a result of the split. This requires the consensus of the board.

Next, the company will need to seek the approval of the shareholders through an ordinary resolution in a general meeting. Once approval has been sought, the company can then file a “Notice by Local Company of Alteration in Share Capital” with the registrar through Bizfile+. If the company is a publicly listed company, it would also have to comply with the SGX-ST listing requirements.


Do note that there is no limit to the number of times a company can split its shares. This is of course in accordance with the provisions in the company’s constitution.


If you are looking to perform a share split for your company, or have any queries regarding share splits, please contact us at [email protected].


When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.


Yours Sincerely,
The editorial team at Singapore Secretary Services

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