Impact of Atos SE’s Proposed Reverse Stock Split

Atos SE, a European company with a share capital of €17,903,597.96, has announced a Combined General Meeting (ordinary and extraordinary) for its shareholders. ​ The meeting is scheduled for Friday, January 31, 2025, at 10 a.m. CET at the company’s registered office in Bezons, France. ​ The agenda includes the approval of financial statements, allocation of net income, ratification and appointment of directors, approval of compensation policies, and various authorizations and delegations of authority to the Board of Directors, if you are interest in having all the information, this is readily available in English on their website, on Atos SE Notice of Meeting 2025. ​We also touched about this when the voting choices were submitted to shareholders, so we summarised the key information for the voting choices on Atos SE meeting.

Key items on the agenda include:

• Approval of the statutory and consolidated financial statements for the year ending December 31, 2023. ​
• Ratification of the appointments and renewals of several directors. ​
• Approval of compensation components and policies for directors and executives. ​
• Authorization for the Board to purchase, hold, or transfer company shares. ​
• Delegation of authority to the Board for various financial and strategic actions, including share capital increases, issuance of securities, and employee shareholding plans. ​

However as there are 39 pages on that document of quite pure financial terms, we advise that you read the full document yourself to avoid confusion when trying to condense that amount of information. For the purpose of this post, we want to focus on the potential stock reverse split for Atos SE, one of the most asked questions for Atos SE stock.

Here’s our best try of summary of the main points for an investor regarding the reverse stock split resolution on Atos SE, if you want to have a full look at this, the information is extracted from resolution twenty-nine. At the time, this is just a voting option:

1. Delegation of Powers:

• The Board of Directors is authorized to decide on one or more reverse splits of the company’s share capital, with powers to subdelegate within the law.

2. Number of Shares After the Split:

• The number of shares in the company after the reverse stock split will be at most 10,000 times fewer than the number of shares before the split. For example, if the company currently has 10,000,000 shares, the new share count could be reduced to a maximum of 1,000 shares after the split.

3. Shares Owned by Shareholders:

• Shareholders with fewer than the required number of Old Shares to effect the reverse stock-split will be required to either:
  • Buy additional shares to meet the requirement, or
  • Sell excess shares to reach the required number.
• This action must be taken within 30 days after the reverse stock-split begins.

4. Fractional Shares:

• Fractional shares resulting from the reverse stock-split will not be allocated individually. These fractional shares will be sold and the proceeds will be distributed proportionally to shareholders who hold fractional rights.

5. Timeline and Process:

• Board Powers:
  • The Board has 12 months from the General Meeting to implement the reverse split.
  • They will determine details such as the terms of the reverse split, including the start date and exchange period for consolidating old shares (up to 30 days).
• Exchange Period:
  • Shareholders will have a maximum of 30 days to exchange their Old Shares for New Shares after the reverse stock split is officially announced.

6. Legal and Regulatory Compliance:

• The company will ensure all legal and regulatory notices are published, including the required announcements in the Bulletin des Annonces Légales Obligatoires.
• The exercise of securities (e.g., stock options, warrants) may be suspended for up to 3 months to facilitate the reverse split.

7. Adjustments to Shareholder Rights:

• After the reverse split, the company may need to adjust:
  • Rights of holders of free shares.
  • Securities giving access to the capital (such as options or convertible bonds).
• These adjustments will comply with legal and contractual provisions.

What Investors Should Know:

What matters for us, as investors is the following:

• The reverse stock-split does not change the value of the company, but it reduces the number of shares in circulation. The aim is often to increase the share price, which might make the stock more attractive to certain investors, however, this is not always the case. They are not providing a reverse stock split rate although confirmed the maximum rate for reverse stock split.
• Fractional shares will be sold and the proceeds distributed to shareholders.
• Investors will need to take action to ensure they have the required number of Old Shares to participate in the reverse stock split.
• There will be temporary suspensions of certain securities and potential adjustments to shareholder rights as a result of the reverse stock-split.

As we said in other occasions, this move is typically intended to enhance the company’s stock price and market perception but does not affect the overall value of an investor’s holdings directly (only the number of shares they hold). We had a specific post explaining stock splits and how they affect your investment.

While this is might be a good choice to improve stock price, there are also another resolutions (30 to 39) where is proposed different ways of issuance of shares which may dilute the investment of current shareholders. So as always, get plenty of information on your side before doing any investment decision.

Note: There is a more updated article about current state of Atos SE and what lies ahead