CMS Enhancements to Ask OK for Reverse Stock Split

CMS Enhancements Inc., the small but growing Costa Mesa maker of computer add-on products, has called a special stockholder meeting for June 1 to ask approval for reincorporation under Delaware laws and for a reverse, 1-for-7 stock split.

By turning nearly 51.4 million shares into 7.34 million shares, CMS hopes to boost the price of its common stock so it can be traded either on the American Stock Exchange or the National Assn. of Securities Dealers national market system.

Taylor said CMS wants to make its stock more available to a broader range of investors. But its stock, which has been selling at about $1.25 a share, needs to be selling above $5 a share to get on the Amex and above $3 a share to get on the NASD national market system, Taylor said. A reverse stock split would put the price well above $7 a share, he said.

By reincorporating, the company hopes to take advantage of Delaware’s corporate laws that lessen the liability of directors and officers, said Allen G. Taylor, the company’s vice president for marketing.

Throughout the nation, companies have been having a difficult time attracting good outside directors because of allegedly broad liability laws that open the directors to a variety of lawsuits.

“CMS is seeking directors at this time, and the Delaware law should make it easier to find qualified candidates,” Taylor said.