Investment banks will claim the title regardless if you give it to them or not. Dormant accounts have a definitive length of time. You have to roll debt in them. A Deed of Gift is only a formality it does not need to be signed and returned.
What happens in when a huge short takes place. Because your equity is a derivative the issue will become or could become what is often referred to as a stall. Much like an aircraft it could fall out of the air and crash to the ground if support is not given.
Support comes in the way of news cost, administration costs as well depreciation costs.
All these costs must be absorbed by the company. If there is no volume after a large short the gross revenue ie: deferred revenue or retained earnings becomes nill and can't support the gross revenue.
Here is an example. Let’s day you have ten million in capital surplus. The stock falls big time creating a huge deficit relative to its last trade.
The only way to get it back up is counter the short fall by adding capital from your capital surplus onto your gross revenue then bumb up your advertising costs. You could sell off your piggy backed positions but you run into the chance of falling below the 51% threshold to say you have control. If the company does not have control of the source they can’t use the source. Now they can pick up a lesser source but they can be often a tough sell. They can if resourseful find a private investor to repurchase the shares of the piggy backed company. They can also go into debt with a piggy backed company to acquire the equity.
The bottom line is it’s expensive running and supporting a public company and should the revenue fall too far with little capital support to move her back up then it’s in the hands of the equity holders to save it.
There is a strong forse working for the short sellers that have just as much on the line as the longs.
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