Carboat, it is illegal, just not perceived like that because nobody ever reacted.
A PPHM Reverse Split must be a voting-power neutral transaction.
If one has 100 PPHM shares of 1000 outstanding your voting power is 10%. If you authorise an extra 1000 shares the voting power was 10% down to 5% over time as the shares get issued in deals or on the open market.
One accepted this voting power reduction in a clearly limited way to 5% when voting the authorised shares in. And one authorised THOSE PPHM common shares and not all future 'remakes' as are shares after a reverse split. The common share after a RS is not the same share as the common share before the RS.
If a reverse split takes place then this voting power MUST BE MAINTAINED. After the reverse split you must have the exact same thing as before as a reverse split is a transaction to remain compliant with NASDAQ listing rules not something the government imposes. It is not a safe conduct to bypass shareholders in steeling there voting power.
In the above example a 10 to 1 reverse split would land one with 10 shares on 1100 outstanding if the authorised are not split. So the 10 shares would have a voting power of 0.9% if the shares get issue, hence much lower then the 5% one accepted when voting the authorised shares in.
So we MUST react massively to prevent this.
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