Deregistration should not be confused with a going private transaction, which typically involves an infusion of capital and where a company usually has too many shareholders to deregister, causing it to undertake a transaction which results in a reduction of the number of its shareholders. Possible going private transactions include: (a) a merger with, or sale of assets to, another company; or (b) acceptance of a tender offer from another company to buy all or most of the company’s publicly held shares; or (c) declaration of a reverse stock split that not only reduces the number of outstanding shares but also reduces the number of shareholders. In this type of reverse stock split, the company typically gives shareholders a single new share in exchange for a block of the old shares. If a shareholder does not have a sufficient number of old shares to exchange for new shares, the company will usually pay the shareholder cash based on the current market price of the company’s stock.
