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CSC course- FIP > ch.11 > Flashcards

ch.11 Flashcards

(51 cards)

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1
Q

sole proprietorship

A

one person running own business
§ Taxed at personal tax rate

Personally liable for all debts, losses, obligations

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2
Q

partnership

A

2 or more ppl contributing to the business
§ Could be capital or expertise req to run business

§ Legislated undr partnership act

§ 2 firms of partnership agreements:

  • general partnership
  • limited partnersship
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3
Q

General partnership

A

® involved in day to day operations

® personally liable for all debts and obligations incurred by biz

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4
Q

Limited Partnership

A

® cannot participate in daily business activity

® liability limited to partners investment

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5
Q

Corporation

A

distinct legal entity separate from ppl who own the shares
§ Pay taxes and can sue or be sued in couirt of law

Property acquired by corporation doesn’t belong to shareholders

		§ Shareholders have NO LIABILITY

		§ Raise funds by issuing equity or debts
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6
Q

Advantages of corporation

A
  • limited liability
  • continuity of existence
  • transfer of ownership
  • ability to finance
  • growth
  • Legal entity
  • Professional mgmt
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7
Q

Disadvantages of corporation

A
  • Loss of flexibility
  • Taxation
  • Expense
  • Capital withdrawal
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8
Q

private corporations

A

restrictions in charter on right of shareholders transfers
§ Limit on number of shareholders

Prohibits inviting members of public

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9
Q

Public corporations

A

companies shares listed on stock exchange or traded over the counter

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10
Q

by laws regulated by

A

○Federal/provincial act under which the charter issued
○ Own charter
○ By laws

passed by directors and approved by shareholders

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11
Q

Voting and control

A
  • through right to vote, shareholders exercise right as owners to control destiny of corp.
    • They elect directors who guide/control business
    • Sale, merger, liquidation, amendment of charter- shareholdrrs must approve
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12
Q

shareholders meetings

A

• All shareholders must be givem opportunity to receive materials relating to meetings of shareholders

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13
Q

Voting by proxy

A

proxy: power of attorney given by shareholder that gives designated person authority to vote shareholders stock at shareholders meetings

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14
Q

voting trusts

A

• Corp undergoing restructuring b/c of financial difficulties may be plced under control voting trust

Put in to effect for specific periods of time or until results achived

shareholders asked to deposit shares with trustee

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15
Q

Financing or underwriting

A

Process by which issuer (gov/company) raises debt/equity capital publicaly/privately called

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16
Q

government finance dept

A

specializes in selling debt instruments to institutions and other interested parties

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17
Q

corporate finance dept

A

• Dealer must balance the needs of corporate client that requirs funding w/ requirements of investing public that provide money req for corporation

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18
Q

Government securities Distributors:

A

bids for their own accounts as well as bids for customers

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19
Q

primary dealers

A

Governments securities distributors that maintain threshold of activity

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20
Q

non competitive tender

A

Bid accepted in full by Bank of Canada and bonds awarded at auction average

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21
Q

syndicate

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A

many major dealers whose combined financial responsibility and distributions powers are more than adequate to underwrite and sell the large issues req.

appointed by provincial gov to underwite issues as well as advise and manage process of issuing securities

22
Q

guaranteed debt

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A

issued in name of crown corporation, but guaranteed by provincial gov as pmt

23
Q

negotiated offering

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A

firms mgmt negotiates with dealer on type of security, price, interest/valuation multiple, special featurwes and protective provisions req to market new issue

24
Q

authorized shares

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A

: max number of common or preferered shares that corp can issue is under terms of the charter

25
issued shares
part of auth shares that have been issued by corp
26
outstanding shares
part of the issued shares which remain outstanding and owned by shareholders of company
27
outstanding shares
part of the issued shares which remain outstanding and owned by shareholders of company
28
market capitalization
total dollar value of company based on current market price of issued and o/s shares
29
Public float
part of issued shares that are o/s and available for trading by public and not held by anyone different from o/s shares ○ Smaller float = more volatile § b/c large buy/sell orders on stock influence price a lot
30
mortgage bonds
backed by specific pledge of asset- land, property
31
debentures
backed only by general credit of corporation
32
adv/disadv of issuing securities
later
33
Methods of offerign
- Private placement | - Public offering
34
Private placement
large financial investors- i.e banks, mutual fund companies, insurance companies , and pension funds- solicited and eniter issue sold usually offered to sophisticated investors and institutional clients ○ No detailed disclosure or public notice ○ And no formal prospectus
35
Public offering
primary offering: new issue of securities by issuer and takes place in IPO market Secondary offering: public sale of company previously issued securities made after IPO
36
treasury shares
Company may find it advantagoes to repurchase some of its o/s sahres currently trading in market ○ Don’t have voting rights or dividend entitlements
37
Prospectus
• Detailed descriptions of securities offered and issuing corporation
38
material fact
nformation that significantly affects or would reasonably be expected to have significant effect on market prices • Prospectus designed to enable prospective investors to make intelligent investment decisions • Must be mailed or delivered to all purchaser of securities being offered through public offerings by midnight on second business day after trade
39
Preliminary prospectus
disclosure document, and to solicit expressions of interest from potential buyers of security
40
final prospectus
must contain sufficient details on the securities being offered for sale -- full, true, plain disclosure ○ Must contain all information that may be omitted in prelimanary Must incl consent of experts
41
green sheet
information circular for in house use only
42
short form prospectus
may be used only by certain senior reporting issuers who have made public distributions and subject to continuous discloser req of financial and other req info
43
after market stabilization
One of duties of lead dealer, dealer is req to support offer price of the stock once begins trading in secondary market 3 types: over allotment penalty bid ??
44
over allotment options
§ Allows underwriters to initially sell securities in excess of original amount offered by issuer for sale to public price below IPO- buy sharwes to close out short position- no over allotment price above IPO- exercise over allotment, but shares from co. to close out short position
45
Penalty Bid
Lead underwriter will penalize members of selling group if their customers "flip" (sell) shares in weak issue after market during distribution or shortly after offer closes
46
Escrowed shares
serve as pmt for properties, goods/services shares held by independent trustee in trust for its owner that cannot be sold/trf unless special approval given ○ Ties value of the shares held by these sharehlders to what happens to properry used to obtain the shars
47
Capital Pool company (CPC)
vehicle to provide businesses with opportunity to obtain financing earlier in development than might be possible with regular IPO
48
nex
separate board of TSX venture exchange that provides trading forum for companies that have fallen below venture exchg listing standards
49
temp withdrawal- Detailed opening
Before opening of trading, echg can order tradign be delayed if heavy influix or buy/sell orders for particular security.
50
Temp withdrawal- Halt in trading
to allow significant news to be reported and widely disseminated
51
Suspension in trading
§ Imposed if company financial condition doesn’t meet echg req, if co fails to comply with the terms of listing agreement or for some other good cause

CSC course- FIP (11 decks)

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