What is one method by which a company can alter its share capital?

A company can alter its share capital through a method known as subdivision or consolidation of shares, which effectively changes the number of shares in circulation without affecting the overall capital value.

In a subdivision, also referred to as a stock split, a company increases the number of its shares by dividing existing shares into multiple shares, which results in a proportionate decrease in the value per share. This can make shares more affordable for investors and enhance liquidity. For example, a company might split its stock 2-for-1, meaning shareholders receive an additional share for each one they already own, thus doubling the number of outstanding shares while halving the price per share.

Conversely, consolidation, or a reverse stock split, involves merging multiple shares into a single share, which increases the per-share price. This can be beneficial for companies that want to avoid the issues associated with a very low share price, such as delisting from stock exchanges.

The other methods listed, such as increasing profit margins or liquidating assets, do not directly change the number of issued shares or the nominal share capital itself. Distributing shares as dividends, known as stock dividends, does result in a change in the number of shares held by shareholders, but this does not alter the overall capital