▁mut ual ▁funds , ▁for ▁example , ▁have ▁rules ▁against ▁purch asing ▁a ▁stock ▁whose ▁price ▁is ▁below ▁some ▁minimum , ▁perhaps ▁US $ 5 . ▁A ▁common ▁reason ▁for ▁a ▁reverse ▁stock ▁split ▁is ▁to ▁satisfy ▁a ▁stock ▁exchange ' s ▁minimum ▁share ▁price . ▁ ▁A ▁reverse ▁stock ▁split ▁may ▁be ▁used ▁to ▁reduce ▁the ▁number ▁of ▁share hold ers . ▁If ▁a ▁company ▁comple tes ▁a ▁reverse ▁split ▁in ▁which ▁ 1 ▁new ▁share ▁is ▁issued ▁for ▁every ▁ 1 0 0 ▁old ▁shares , ▁any ▁invest or ▁holding ▁fewer ▁than ▁ 1 0 0 ▁shares ▁would ▁simply ▁receive ▁a ▁c ash ▁payment . ▁If ▁the ▁number ▁of ▁share hold ers ▁dro ps , ▁the ▁company ▁may ▁be ▁placed ▁into ▁a ▁different ▁regul atory ▁category ▁and ▁may ▁be ▁govern ed ▁by ▁different ▁law — for ▁example , ▁in ▁the ▁U . S ., ▁whether ▁a ▁company ▁is ▁reg ulated ▁by ▁the ▁SE C ▁depends ▁in ▁part ▁on ▁the ▁number ▁of ▁share hold ers . ▁ ▁From ▁time ▁to ▁time , ▁companies ▁will ▁issue ▁a ▁reverse ▁split ▁concurrent ly ▁with ▁a ▁forward ▁split , ▁making ▁a ▁reverse / forward ▁split . ▁ ▁Note ▁that ▁in ▁reverse / forward ▁spl its , ▁the ▁share holder ' s ▁old ▁shares ▁are ▁er ased , ▁as ▁they ▁receive ▁a ▁number ▁of ▁new ▁shares ▁in ▁proportion ▁to ▁their ▁original ▁hold ings . ▁By ▁contrast , ▁in ▁a ▁simple ▁stock ▁split , ▁the ▁original ▁shares ▁remain ▁on ▁the ▁exchange ▁as ▁share hold ers ▁receive ▁additional ▁shares