BANGALORE: Infosys Technologies Limited announced on Monday that it would split its equity shares at the ratio of 2:1. Each of the present shares, with a par value of Rs 10, will be split into two shares of Rs 5 par value. The decision was taken at a board meeting held early this morning. The board also announced that an Extra-ordinary General Meeting (EGM) would be held on December 29 to get the approval of shareholders.
"It is customary in markets to split the stock to improve liquidity," said Infosys chairman and CEO N.R. Narayana Murthy. "SEBI has given flexibility to companies to sub-divide the par value of shares to less than Rs. 10 and the company has chosen this option to improve liquidity," he added.
Consequently, the company’s American Depositary Shares (ADSs), listed on the Nasdaq National Market, will be split in the ratio of 2-for-1. The ADS holders will receive two ADSs for every ADS held by them. The ratio of two ADSs to one underlying equity share remains unchanged.
According to a release, as of September 30, 1999, Infosys had 3,30,69,400 equity shares of par value Rs 10 each outstanding. Upon the approval of the stock split (i.e., sub-division of shares) by the shareholders, the outstanding shares will increase to 6,61,38,800 equity shares of par value Rs 5 each. As of September 30, 1999, Infosys had 20,70,000 ADS outstanding. Upon completion of the stock split, the number will increase to 41,40,000 ADS.
The scrip had touched an all time high of Rs 9,750 on the Bombay Stock Exchange last week following reports that the company had informed the exchange of going in for a stock split. However, on Monday, the scrip lost more than Rs 200 in the morning against its previous close and was being traded at Rs 9,385 when reports last came in.