Item
3.03 Material Modification to Rights of Security
Holders
As
previously disclosed in the Definitive Information Statement on
Schedule 14C filed by BMB Munai, Inc. (the “Company”)
with the Securities and Exchange Commission on August 11, 2017 (the
“Information Statement”), the Board of Directors of the
Company and the Company’s majority stockholder, Timur Turlov,
approved a reverse stock split of the Company’s issued and
outstanding shares of common stock at a ratio of
one-share-for-twenty-five-shares (1:25) (the “reverse stock
split”) and a name change of the Company to Freedom Holding
Corp. (the “name change”).
On
September 1, 2017, the Financial Industry Regulatory Authority
notified the Company that the reverse stock split will take effect
at the open of business on September 6, 2017 (the “Effective
Date”). On the Effective Date, the trading symbol for the
Company’s common stock will change to “BMBMD” for
a period of 20 business days, after which the “D” will
be removed from the Company’s trading symbol. Thereafter the
trading symbol for the Company’s common stock will be
“FRHC.” In connection with the reverse stock split and
name change, the CUSIP number for the Company’s common stock
will change to 356390104.
A
Certificate of Amendment to the Company’s Articles of
Incorporation (the “Certificate”) was filed and became
effective at 12:01 am on September 5, 2017.
Reasons for the
Reverse Stock Split
. As
previously disclosed in the Information Statement, the reverse
stock split was approved to provide the Company sufficient
authorized but unissued common stock to fulfill its obligations in
connection with closing the acquisition of LLC Investment Company
Freedom Finance (“Freedom RU”) in June 2017. Following
completion of the reverse stock split, the Company will issue Mr.
Turlov, the Company’s Chief Executive Officer, Chairman of
the Board of Directors and majority stockholder, approximately
12,278,602 shares of restricted common stock in connection with the
acquisition of Freedom RU. The reverse stock split will also
provide the Company sufficient authorized but unissued shares to
complete the acquisition of FFINEU Investments Limited
(“Freedom CY”), if and when regulatory approval of that
acquisition in Cyprus is received.
As
disclosed in the Information Statement, the reverse stock split was
also approved as part of the Company’s plan to seek listing
of its common stock on a national securities exchange. The Company
has not yet submitted a listing application with any national
securities exchange and, at present, the Company does not meet all
of the initial listing requirements of any national securities
exchange.
Effect of Reverse
Stock Split; Treatment of Fractional Shares
. On the Effective Date, every twenty-five
shares of the Company’s common stock that are issued and
outstanding will automatically be combined into one issued and
outstanding share without any change in the par value of such
shares and without any change to the authorized common stock of the
Company. No fractional shares will be issued in connection with the
reverse stock split and shareholders who are entitled to a
fractional share will instead receive a whole share. The reduction
in the number of our issued and outstanding shares of common stock
as a result of the reverse stock split will occur automatically
without any additional action on the part of our
shareholders.
Shareholders
holding shares of our common stock in “street name”
(that is, through a bank, broker or other nominee) will be treated
in the same manner as registered stockholders whose shares of our
common stock are registered in their names. Banks, brokers or other
nominees will be instructed to effect the reverse stock split for
their beneficial holders holding shares of our common stock in
“street name”; however, these banks, brokers or other
nominees may apply their own specific procedures for processing the
reverse stock split. If you hold your shares of our common stock
with a bank, broker or other nominee, and you have any questions in
this regard, we encourage you to contact your bank, broker or other
nominee.
Certificated and
Non-Certificated Shares
. Shareholders who hold their shares in
electronic form at brokerage firms, banks or other nominees do not
need to take any action, as the effect of the reverse stock split
will automatically be reflected. Shareholders holding paper
certificates may (at their option and at their expense) exchange
their stock certificates representing pre-reverse split common
shares for new certificates representing post-reverse split common
shares but they are not required or requested to do so, as the
effect of the reverse stock split will be reflected in the records
of the Company’s stock transfer agent.
Nevada State
Filing
. On August 22,
2017, the Company filed the Certificate with the Secretary of State
of the State of Nevada. The Certificate became effective at 12:01
a.m. on September 5, 2017. A copy of the Certificate is attached
hereto as Exhibit 3.01 and is incorporated herein by
reference.
As
a result of the reverse stock split, each shareholder’s
percentage ownership interest in the Company and proportional
voting power will remain unchanged, except for minor changes and
adjustments that will result from the treatment of fractional
shares. The rights and privileges of the holders of shares of
Company common stock will be substantially unaffected by the
reverse stock split.
Equity Incentive
Plans
. As disclosed in the
Information Statement, the Board of Directors and the majority
shareholder approved the Freedom Holding Corp. 2018 Equity
Incentive Plan to become effective on a date to be determined by
the Board of Directors (the “Plan Effective Date.”) The
Board of Directors also resolved to terminate the BMB Munai, Inc.
2009 Equity Incentive Plan on the Plan Effective Date. The Board of
Directors resolved that the Plan Effective Date would be the day
immediately following the effective date of the reverse stock
split. Therefore the Plan Effective Date will be September 7, 2017.
A copy of the Freedom Holding Corp. 2018 Equity Incentive Plan was
filed with the Information Statement.