Characteristics of the shares and the legal basis of issue
Share - a security, issued a joint stock company (issuer), shows the share participation in the authorized capital of the company and confirms the right to participate in governance.
The shareholders are entitled to receive part of the profits in the form of dividends, and to participate in the division of property in case of liquidation of the company. There are traded on the stock exchange. Issued without a specific term to maturity and may be redeemed only by a legally authorized company or its bankruptcy.
The most common cases where stock companies issue shares, are:
1) the Company;
2) change the par value of the shares when the authorized capital;
3) increase the authorized capital by issue of shares at a fixed nominal value of the latter;
4) the division or consolidation of shares without changing the authorized capital;
5) individual cases of restructuring the company.
The major structural elements of the share issue:
a) the decision to issue shares;
6) the state registration of the issue of shares, and for public companies - as the registration information on the issue of shares;
c) offering for sale;
d) the sale of shares
e) reporting the results of the issue.
Minutes of the decision to issue shares must contain:
• The name of the issuer and its location;
• size of the authorized capital or the value of fixed and current assets of the issuer;
• the purpose and object of its activities;
• the identity of the officers of the issuer;
• the name of the supervisory authority (auditing firm);
• location data previously issued and outstanding securities;
• the purpose of the share issue;
• indication of the categories of shares;
• The number of registered shares and bearer shares;
• the number of preferred shares;
• the total amount of the issue and the number of shares;
• nominal value of the shares;
• The number of voters;
• procedure for the payment of dividends;
• the time and order of subscription and payment of shares;
• The refund in case of failure of the issue of shares;
• Another issue of shares (with the release of their different series)
• order notifications and order placement;
• conditions of the disposal of shares;
• The rights of the holders of preferred shares;
• pre-emptive right to acquire shares in a new issue.
The basic rights of the shareholders are:
• the right to vote;
• The right to share in the profits;
• the first right to buy new shares;
• The right to assets in liquidation;
• The right to inspect.
Issuing shares, stock companies are to:
• provide new enterprise start-up capital required for start-up;
• raise additional cash resources during the operation of the business;
• exchange old shares when the merger with another company.
Classification of shares will be many different
1. By the Issuer:
- Stock Exchange;
- Investment companies and funds.
2. By the time of issue:
• new issues.
3. By volume of the rights of shareholders:
ordinary (simple, common);
convertible, preferred, free of charge.
4. According to the number of votes:
5. By way of reflection of motion:
In such actions appear brighter economic characteristics of the securities, liquidity, profitability, reliability, self-treatment.
Must be distinguished as the market value of the shares or its rate. The classical formula of stock price is:
SC = x 100% = - x 100%, (6.1)
where the spacecraft - the stock price; See. - Dividend; DBD. - Return on bank deposits PE - net profit, H - the rate of dividend payments.
The essence of the formula is to compare the potential revenue from the placement of money in securities and bank deposits. The action will not cost more than the amount which is being put on deposit, generate revenue equal to the dividend of that amount.
Hence the stock price will be:
KA = Nom. + PO, (6.2)
where W - founding profit Nom. - Par value.
Kursoobrazuyuschey factors other than nominal value, will be the level of the constituent ratio of profit and market conditions (Kr.k), equal to the ratio of:
Kr.k. = OPP / OD, (6.3)
where OPP - the volume of effective demand for the shares, OP - the volume of their supply.
Factor kr.k. demonstrates the validity of the quoted market price. If it is 1, it means that the issuer of the stock set right. It enables the entire issue and get the planned incorporation profit. If this value is less than 1, we can assume the overvaluation, and accordingly, nedorozmischennya issue and constituent profit shortfall. If the ratio is greater than 1, then we can talk about a certain underestimation of the shares of the issuer, the availability of potential gains.
As for the stock price in the event of additional issue of existing public companies, the basis of exchange rate is not nominal and real exchange rate of the shares. The latter, in turn, varies around the "intrinsic value" (V.V.A.), which is the ratio of:
VV = Chuck / SC, (6.4)
where Chuck - net assets of the corporation, CA - number of shares.
Kursoobrazuyuschey factor is the ratio of market conditions (Kr.k).
KA = CSA x Kr.k, (6.5)
where CAS - the stock price was formed.
When Kr.k equal to 1, the rate of additional shares to answer a course that has already been formed, and price changes in the market did not happen. The new release is successfully entered the market by covering unmet need. If this ratio is less than 1, then there is a possibility of a fall or crash course. In this case, the Company reassessed its equity capacity and market size. Issuer, at least, do not get planned financial resources. If the ratio is greater than 1 in market conditions, this issue (other things being equal) does not affect the stock price (or market price trend). The Issuer may hold back emissions.
Shares of the most common financial instrument that enables businesses to raise funds and can be used effectively by the change of ownership. Stocks take a fairly extensive niche in the domestic stock market.