BU397 Lecture Notes - Lecture 8: Underwriting, Treasury Stock, Share Repurchase
Document Summary
Have ultimate risk of loss and benefit from success. Dividends or assets on dissolution are not guaranteed. In substance common shares are shares that have the same characteristics as common shares but aren"t called common for legal purposes. The following should be considered when deciding whether a share is common or not: Subordination: shares do not have preferred rank over other shares for dividend or distribution of assets. Risks and rewards of ownership: the shares participate in the earnings/losses of the company and the appreciation/depreciation in value of the company. Obligation to transfer value: no obligation to transfer value, only have value if the company"s net assets have value. No other common shares: all shares in the class in question have the same features. Redemption: the shares are redeemable only upon windup of the company. Given priority claim on assets upon dissolution of the company compared to common shares.
