Listed company, what happens when the share price reaches 1c?

[xrapidx]

Say a smallish company lists on the JSE, with its initial share trading price, what happens if that share price eventually reaches 1c? (to the company)

I've been watching various companies, and I've watched some drop, and rise - and some just keep dropping, some are currently less than half of what they started at.

Say for, example the company itself is doing well - but the share price isn't?

 

[IzZzy]

Say a smallish company lists on the JSE, with its initial share trading price, what happens if that share price eventually reaches 1c? (to the company)

I've been watching various companies, and I've watched some drop, and rise - and some just keep dropping, some are currently less than half of what they started at.

Say for, example the company itself is doing well - but the share price isn't?

If a share price drops below the value inherent to the company (such as its liquidation value), then immediate money can be made by buying all the shares. Pretty much what Benjamin Graham worked out years ago. These companies become targets for predators.

 

[DJ...]

Any company on the main board will delist before reaching that point, whether by their instruction or the market regulators, by acquisition, or the JSE. Such a company would in all likelihood be insolvent by that point. AltX listed companies can trade that low, but it depends on a multitude of factors...

 

[Paul Hjul]

As far as I understand things the JSE, LSE and NYSE initiate delisting the moment the management of the company are unable to prevent company assets from being sought through stock acquisition.
A minority shareholder should be able to get an interdict against trading on the shares (either OTC or on an exchange) and most regulators would suspect insider trading and so on. Pretty sure that business rescue would happen if a companies market equity is less than the value of the company on its books and that a massive adjustment would be required.

Look at Telkom a while back the share price was low compared to how the company valued its assets and the reason was because they over-valued (and under-depreciated) their copper assets, to normalize (and make proper financial decisions) a non-cashflow impacting impairment was required.

 

[DJ...]

The shares would be suspended long before it reaches the 1c mark on the main board, but it's important to remember that the JSE hosts an AltX board as well, where those trading ranges are fairly commonplace...

 

[xrapidx]

Is it possible to find out what that point is?

 

[Paul Hjul]

The shares would be suspended long before it reaches the 1c mark on the main board, but it's important to remember that the JSE hosts an AltX board as well, where those trading ranges are fairly commonplace...

any shares though that start off a high base though

I mean if an instrument on an alternate exchange or OTC setup trades at no more than 25c an instrument then trading in a day at 1c trading price with small volumes could simply represent a lack of trading appetite and one equity holder and a little bit of bargain hunting. But if something on AltX has high volume trade at a quarter of value there is something fishy