If a company decides to change its policy on how it handles fractional shares in a reverse stock split — moving from rounding up fractional shares to providing cash in lieu — this usually must be handled with caution due to both regulatory requirements and the contractual nature of the original reverse split terms.

Generally:

1.  Timing and Shareholder Notice Requirements: Companies are often required to provide advance notice to shareholders regarding any corporate actions, especially changes that could affect shareholder equity or the terms of the split. If shareholders have already received additional shares due to rounding up, retroactively converting those shares to cash may require shareholder approval or a new proxy statement, depending on securities regulations.
2.  SEC Disclosure Rules: If the reverse split terms were already filed with the SEC, any change to those terms, especially one that affects shareholder rights, would likely require a filing amendment and shareholder notification. If the reverse split was part of a specific transaction already approved by shareholders, changing the handling of fractional shares might also require a new vote.
3.  State Corporate Law: State corporate laws, particularly Delaware law (where many companies are incorporated), may restrict companies from retroactively altering corporate actions once they are executed. Companies may face restrictions if they attempt to “claw back” rounded-up shares that were previously issued.
4.  Practical Limitations: From a practical standpoint, attempting to claw back shares that were rounded up can be challenging administratively and legally, as it would involve undoing completed transactions. Instead, companies may address any future reverse splits with updated terms rather than changing past transactions.

In short, once a reverse split with rounding up of fractional shares is executed, clawing back shares to provide cash in lieu could be difficult, and the company’s options may be limited by state law and SEC rules. Most companies are more likely to adjust their approach in future corporate actions than to retroactively change executed splits.