BUSI 3410U Lecture Notes - Lecture 7: Tier 1 Capital, Dividend Tax, Limited Voting
Document Summary
The right to vote confers the right to choose the board of directors which in turn chooses management and determines the control of the company. Dividends have to be declared by the board of directors and shareholders cannot force payment. The three rights have to be assigned to different classes of shares. P(cid:396)efe(cid:396)(cid:396)ed sha(cid:396)es (cid:396)a(cid:374)k i(cid:374) se(cid:374)io(cid:396)it(cid:455) afte(cid:396) all de(cid:271)t of a (cid:272)o(cid:373)pa(cid:374)(cid:455) (cid:271)ut (cid:271)efo(cid:396)e the (cid:272)o(cid:373)(cid:373)o(cid:374) sha(cid:396)eholde(cid:396)s: cumulative or non-cumulative, limited voting rights when dividends in arrears (state of being behind or late) Exact rights depending on the articles of incorporation and the terms under which the shares are issues. Cu(cid:373)ulati(cid:448)e skipped di(cid:448)ide(cid:374)d pa(cid:455)(cid:373)e(cid:374)ts a(cid:396)e a(cid:272)(cid:272)u(cid:373)ulated u(cid:374)til the(cid:455) a(cid:396)e fi(cid:374)all(cid:455) paid. Banks need to meet international capital standards (basel tier 1 capital); not an obligation. I(cid:374)te(cid:396)est ta(cid:454) dedu(cid:272)tio(cid:374) as a (cid:271)usi(cid:374)ess e(cid:454)pe(cid:374)se (cid:271)(cid:455) pa(cid:455)o(cid:396: fully taxed as ordinary income for recipient. Capital gai(cid:374)s (cid:1009)(cid:1004)% full(cid:455) ta(cid:454)a(cid:271)le: losses can be carried back against previous gains or carried forward indefinitely.
