Share Consolidation – Legal Theft

Until you as a shareholder experience a Consolidation of shares you will never be able to appreciate the feeling of being legally robbed of multiple thousands of dollars. It works this way. Buried in one of the annual reports or interim reports there will be a notification of a motion for shareholders to vote on a Consolidation of the company’s shares. As most of the people voting are the ones who have a self interest in the Consolidation, the motion will always be passed. Then a little while later you will get a letter saying your share holding in the company has diminished to a fraction of your original holding leaving you on many occasions holding a non-marketable parcel or very close to it if you don’t get out fast.

Consolidations confirm failure

Shareholders often receive letters from their directors like this:

“We are pleased to announce that following shareholder approval received at the General Meeting we have completed a 50-for-1 share consolidation. This consolidation will deliver a simplified and more efficient share capital base and reposition the stock for broader investor appeal.”

More appropriately the letter from directors should be couched thus:

“We very much regret having to advise that for every fifty shares you once owned in BadlyManaged Limited, you now have one. This savage reduction reflects the underlying diminution in the value of your shares that has already taken place during our stewardship of BadlyManaged. If your shares are still worth anything it would be in your best interests to sell them now and invest the proceeds in a company in the ASX 200.”

Here is a classic:

If in 2006 you bought 50,000 shares in Antilles Oil and Gas NL (formerly Advance Energy Limited), they were worth $14,500 at the closing price of 29 cents on 2 June 2006. The value of your shareholding gradually dwindled and by May 2014 the shares were trading at a tenth of a cent and your 50,000 shares were worth about $50. In June 2014 the company completed a 1 for 60 consolidation. Your new holding of 834 shares traded around the three tenths of a cent mark and was worth in total about $3. A couple of months later the company again consolidated your shares 1 for 80. Your new holding of 11 shares was and is worth nothing.

The whole idea behind a consolidation is to try and restore the company’s share price into the investment grade range and thus make it more appealing. Don’t be fooled, the damage has already been done.
There are an enormous amount of these Consolidations happening all the time and it isn’t just happening to small speculative stocks, it can be major mainstream stocks and they can take out life savings from people who can least afford it……

quote: “I am a self-funded retiree in my 80s. In September 2015 I bought 50,000 shares in Ten Network Holdings at $0.1925 each. In October 2015, I bought another 50,000 at $0.1925 each and, in November 2015 I was allotted 18,919 shares at $0.15 each, taking my total to 118,919 shares. On January 21, 2016, I received a statement from Ten Network advising me that due to consolidation of capital on the basis of 10 into 1, I now hold 11,892 shares only. The price of the shares on January 21, 2016, was quoted as $0.14 each, which means my capital was reduced by $107,027 overnight. I was never notified by the Ten Network that such action was going to take place. Shouldn’t the shareholders have been notified prior to such action? Is such action legal, or even ethical, taken by the network without discussing it with the shareholders first? I would appreciate it if you can clear up this matter for me, as I am not well-versed with share trading. T.O.”…onsolidated-is-that-fair-20160906-gra48o.html

Eventually the price of TEN diminished to nothing and went into receivership and then…..
On the 10 November 2017, leave was granted to the receivers and managers of TNHL to transfer shares in TNHL pursuant to the deed of company arrangement to CBS Australia or its nominee. CBS Network Ten BV was nominated as the proposed transferee. Shareholders in TNHL did not receive any payments for the transfer of their shares.

There goes an 80 year old gentleman’s $100,000 plus and probably quite a lot more just like him. It would be interesting to know the $ value of that particular Consolidation of ordinary shareholders investments. The rich get richer and the poor get poorer, and the worst part, nobody cares.

We must begin to protect ourselves and each other as best we can. We need to educate ourselves. If we want to buy a share, we need to check to see if it has had a Consolidation and if it has, best advice is to move on. Go through all the ASX notifications for all the years the stock has been listed. Hunt out the Consolidations if there were any. You can find out how long the stock has been around by looking up They list all shares not just those which have been delisted. It gives you the company name changes and Directors names and a host of other very valuable information.

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