Shareholders of T2 Biosystems (NASDAQ:TTOO) stock will have to wait a bit longer for the company to hold its 2023 annual meeting of stockholders. Yesterday, the diagnostics company announced that it would reschedule the meeting to Sept. 15 from Sept. 12. The meeting was rescheduled to change the voting standard of Proposal 1, or the reverse stock split proposal, in order to comply with recent amendments to the Delaware General Corporation Law (DGCL).
“Effective August 1, 2023, §242(d)(2) was added to the DGCL, which changes the voting standard for reverse stock splits from a majority of the outstanding shares to a majority of the votes cast on the proposal, provided certain other requirements are satisfied,” said T2 in a filing. In addition, abstentions will not factor into the vote and will have no effect on Proposal 1.
The record date for voting eligibility at the meeting remains July 21, 2023. Eligible voters can still cast their votes during the period of postponement.
TTOO Stock: T2 Reschedules Annual Meeting to Sept. 15
Getting approval for the reverse split is extremely important to T2, as its shares currently trade below $1 by a wide margin. This means that it’s in violation of Nasdaq’s minimum price requirement of $1 per share. The company has proposed a reverse split in a ratio between 1-for-50 and 1-for-150 to address this.
According to InvestorPlace analyst Tom Yeung, the reverse split could pose trouble for small TTOO stock investors:
“The most obvious issue is that the action will force some small shareholders out of their positions. Most reverse splits offer no fractional shares, and T2 Biosystem[s] plans to forcibly sell off any rounding errors. That means any shareholders who own less than $45 of shares could see their entire stake liquidated. (This assumes a 1-for-150 reverse split where a shareholder owns 149 shares.)”
Yeung adds that reverse splits are typically a sign of corporate weakness and that firms that enact reverse splits “tend to underperform the market by -22.7% over the next three years.”
The reverse split proposal seems to be the most important proposal for T2’s upcoming meeting. Other proposals include approving the 2014 Incentive Award Plan, the 2014 Employee Stock Purchase Plan and the ratification of BDO USA as T2’s independent registered public accounting firm.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.