RADNOR, PA — In a strategic move aimed at reducing regulatory obligations, Safeguard Scientifics, Inc. (NASDAQ: SFE) has announced its plans to execute a reverse and forward stock split strategy, followed by voluntary delisting from the Nasdaq Stock Market.
The decision, made following a Special Meeting of Shareholders held on December 15, 2023, will see the company implementing a reverse stock split at a ratio of 1-for-100, immediately followed by a forward stock split at a ratio of 100-for-1. The Board of Directors at Safeguard Scientifics believes that this strategy will reduce the number of record holders of the company’s common stock below 300, thus eliminating the requirement for the company to file reports with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934.
This move aligns with the company’s previously announced plan to cease the registration of its common stock under the Exchange Act, and to delist its common stock from trading on the Nasdaq Stock Market.
Under the proposed plan, shareholders owning fewer than 100 shares prior to the reverse stock split will be entitled to a cash payment of $1.65 per share in lieu of fractional shares and will no longer be shareholders of the company. Those shareholders owning at least 100 shares prior to the reverse stock split will retain their shares through the forward stock split, resulting in no change in the total number of shares held due to the stock splits.
As part of the delisting process, the company intends to file a Form 25 with the SEC, notifying of its removal from listing and/or registration under Section 12(b) of the Exchange Act. The delisting is expected to occur ten days after the filing of Form 25. Subsequently, the company plans to file a Form 15 with the SEC, certifying that it has less than 300 shareholders of record, which will terminate the registration of the company’s common stock under Section 12(g) of the Exchange Act.
This strategic maneuver by Safeguard Scientifics represents an unconventional approach to corporate governance and financial management. While the move may raise eyebrows among some investors, others may see it as a savvy way to streamline operations and reduce regulatory burdens. The ultimate impact of this decision on Safeguard’s investment appeal and business performance remains to be seen.
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