BA 3340 Lecture Notes - Lecture 18: Liquidating Distribution, Issued Shares, Common Stock
Document Summary
Companies sell shares to investors to raise funds (to start the company or for other activities) Contributed equity: amount of capital raised by issuing shares to investors in exchange for an ownership claim on company assets. Issued (outstanding) shares: number of shares a company has distributed to owners to date. Right to participate proportionally in residual assets (if company is wound up) Right of preemption (maintain the same proportion of ownership in the company) E. g. company issues 100 shares for per share. Instalment: applicants for shares to pay some money when they apply and more money later. Why: ensure only serious applicants submit requests for shares, and their intention is signaled by an initial payment (instalment), receive capital over time, increase the pool of relevant shareholders (affordability) Application: request to buy shares and the money payable when shares are applied for.
