CNFinance Announces Plan to Implement ADS Ratio Change

Rhea-AI Summary

CNFinance Holdings (NYSE:CNF), a leading home equity loan service provider in China, has announced plans to change its American Depositary Shares (ADS) ratio from 1:20 to 1:200 Class A ordinary shares. This change will effectively function as a 1-for-10 reverse ADS split.

The ratio change is expected to take effect around September 5, 2025. ADS holders will need to exchange every 10 existing ADSs for 1 new ADS. JPMorgan Chase Bank will manage the exchange process, and CNF will continue trading on NYSE under the same symbol. No fractional ADSs will be issued; instead, fractional entitlements will be sold and proceeds distributed to affected holders.

Positive

• Expected proportional increase in ADS trading price
• No impact on underlying Class A ordinary shares structure
• Maintains NYSE listing

Negative

• Holders will receive cash instead of fractional shares
• Potential fees, taxes and expenses for fractional share sales
• No guarantee of proportional price increase after ratio change

Insights

Financial Structure Analyst

CNFinance's 1:10 reverse ADS split aims to boost share price but doesn't change underlying value or operations.

CNFinance Holdings (NYSE: CNF) has announced a significant change to its American Depositary Shares (ADS) structure, effectively implementing a 1-for-10 reverse split for ADS holders. The company will change the ratio of ADSs to Class A ordinary shares from the current 1:20 to 1:200, scheduled to take effect around September 5, 2025.

This structural adjustment requires existing shareholders to exchange every 10 ADSs they currently hold for 1 new ADS. The move will automatically increase the trading price per ADS by approximately 10x, although the company appropriately acknowledges there's no guarantee the post-split price will maintain exactly that proportion.

It's important to understand this change doesn't affect CNFinance's market capitalization or the underlying business fundamentals. The total value of all outstanding shares remains unchanged, as no actual ordinary shares are being issued or cancelled. This is purely a mechanical adjustment to the ADS structure.

For investors, there are several practical implications. Fractional shares won't be issued – instead, JPMorgan Chase Bank will sell these partial entitlements and distribute cash proceeds to affected shareholders. The ticker symbol "CNF" will remain unchanged on the NYSE.

Reverse splits are typically implemented when companies want to increase their share price, often to maintain compliance with exchange listing requirements (which usually require minimum share prices) or to appeal to institutional investors who may avoid lower-priced stocks. While the announcement doesn't specify CNFinance's exact motivation, the mechanics and implications align with standard reverse split practices in the financial markets.

GUANGZHOU, China, Aug. 15, 2025 /PRNewswire/ -- CNFinance Holdings Limited (the "Company") today announced that it plans to change the ratio of its American depositary shares ("ADSs") to its Class A ordinary shares (the "ADS Ratio"), par value US$0.0001 per share, from the current ratio of one (1) ADSs to twenty (20) Class A ordinary shares to a new ratio of one (1) ADS to two hundred (200) Class A ordinary shares.

For the Company's ADS holders, the change in the ADS Ratio will have the same effect as a one-for-ten reverse ADS split. A post-effective amendment to the ADS Registration Statement on Form F-6 will be filed with the SEC to reflect the change in the ADS Ratio. The Company anticipates that the change in the ADS Ratio will be effective on or about September 5, 2025 (U.S. Eastern Time), subject to the effectiveness of the post-effective amendment to the ADS Registration Statement on Form F-6 on or before that date.

Each ADS holder of record at the close of business on the date when the change in ADS Ratio is effective will be required to surrender and exchange every ten (10) existing ADSs then held for one (1) new ADS. JPMorgan Chase Bank, N.A as the depositary bank for the Company's ADS program, will arrange for the exchange of the current ADSs for the new ones. The Company's ADSs will continue to be traded on the New York Stock Exchange under the ticker symbol "CNF".

No fractional new ADSs will be issued in connection with the change in the ADS Ratio. Instead, fractional entitlements to new ADSs will be aggregated and sold by the depositary bank and the net cash proceeds from the sale of the fractional ADS entitlements (after deduction of fees, taxes and expenses, where applicable) will be distributed to the applicable ADS holders by the depositary bank. The change in the ADS Ratio will have no impact on the Company's underlying Class A ordinary shares, and no Class A ordinary shares will be issued or cancelled in connection with the change in the ADS Ratio.

As a result of the change in the ADS Ratio, the ADS trading price is expected to increase proportionally, although the Company can give no assurance that the ADS trading price after the change in the ADS Ratio will be equal to or greater than ten times the ADS trading price before the change.

About CNFinance Holdings Limited

CNFinance Holdings Limited (NYSE: CNF) ("CNFinance" or the "Company") is a leading home equity loan service provider in China. CNFinance, through its operating subsidiaries in China, conducts business by connecting demands and supplies through collaborating with sales partners and trust companies under the trust lending model, and sales partners, local channel partners and commercial banks under the commercial bank partnership model. Sales partners and local channel partners are responsible for recommending micro- and small-enterprise ("MSE") owners with financing needs to the Company and the Company introduces eligible borrowers to licensed financial institutions with sufficient funding sources including trust companies and commercial banks who will then conduct their own risk assessments and make credit decisions. The Company's primary target borrower segment is MSE owners who own real properties in Tier 1 and Tier 2 cities and other major cities in China. The Company's risk mitigation mechanism is embedded in the design of its loan products, supported by an integrated online and offline process focusing on risks of both borrowers and collateral and further enhanced by effective post-loan management procedures.

For more information, please contact:
CNFinance
E-mail: ir@cashchina.cn 

 

View original content:https://www.prnewswire.com/news-releases/cnfinance-announces-plan-to-implement-ads-ratio-change-302530939.html

SOURCE CNFinance Holdings Limited

FAQ

What is the new ADS ratio for CNFinance (NYSE:CNF) and when will it be effective?

CNFinance is changing its ADS ratio from 1:20 to 1:200 Class A ordinary shares, effectively a 1-for-10 reverse ADS split, expected to be effective around September 5, 2025.

How will CNFinance's ADS ratio change affect shareholders?

Shareholders will need to exchange every 10 existing ADSs for 1 new ADS. Fractional shares will be sold and proceeds distributed to holders. The trading price is expected to increase proportionally.

Will CNFinance's ADS ratio change affect the underlying ordinary shares?

No, the ADS ratio change will have no impact on CNFinance's underlying Class A ordinary shares. No ordinary shares will be issued or cancelled.

How will fractional shares be handled in CNFinance's ADS ratio change?

Fractional new ADSs will not be issued. Instead, they will be aggregated and sold by JPMorgan Chase Bank, with net proceeds distributed to affected ADS holders.

What is CNFinance's main business model?

CNFinance is a leading home equity loan service provider in China, connecting MSE owners with financing needs to licensed financial institutions through trust lending and commercial bank partnership models.