5. Finance

Question 1

What are the different types of shares?

Answer 1

Issued shares
- Shares issued by Corporation

Outstanding shares

• [Issued shares] LESS [Treasured shares]
• Voting rights

Treasured shares

• Issued shares repurchased by Corporation
• NO voting rights

Question 2

What is the difference between debt and equity?

Answer 2

Debt
- NO ownership by Corp

Equity
- Ownership by Corp

Question 3

What type of debts are there?

Answer 3

Bonds
- Secured

Debenture
- NOT secured

Question 4

What type of equity is there?

Answer 4

Sold

• Issued shares
• Outstanding shares

Reacquired (redemption/reacquired)

• Authorised shares
• NOT issued shares

Question 5

How are value of shares determined?

Answer 5

By directors (as they deem appropriate) (RMBCA)

Par value (Articles)
- Generally eliminated by RMBCA

Question 6

What is required for consideration to pay equities?

Answer 6

1) At Directors’ request
2) NOT discriminatory
3) Tangible/Intangible
4) Beneficial to Corporation

Question 7

What happens if SH fails to pay consideration for equities?

Answer 7

Liable for unpaid amount

Question 8

What is required for shareholder to exercise their pre-emptive rights?

Answer 8

1) Authorised by Articles
2) Issued in cash
3) Issued at least 6 months after incorporation
4) SH has voting rights

=> SH can purchase at same % ownership in corporation