Overview of Equity Securities Flashcards
What does “vote by proxy” mean?
A mechanism that allows a designated party - such as another shareholder, a shareholder rep, or management, to vote on a shareholders’ behalf.
What is “statutory voting”?
A common method for voting where each share represents one vote.
What is “cumulative voting”?
A voting process whereby shareholders can accumulate and vote all their shares for a single candidate in an election, as opposed to having their voting rights allocated among all candidates.
What are “Preference Shares”?
(i.e., preferred shares)
A type of equity interest that ranks above common shares with respect to the payment of dividends and the distribution of the company’s net assets upon liquidation.
They also have characteristics of both debt and equity securities.
What are “Cumulative Preference Shares”?
Preference shares for which dividends that are not paid accrue and must be paid in full before dividends on common shares can be paid.
What are “Non-cumulative Preference Shares”?
Preference shares for which dividends that are not paid in the current or subsequent periods are forfeited permanently.
What are “Participating Preference Shares”?
Preference shares that entitle shareholders to receive the standard preferred dividend plus the opportunity to receive an additional dividend if the company’s profits exceed a pre-specified level.
What are “Non-Participating Preference Shares”?
Preference shares that do not entitle shareholders to share in the profits of the company.
Instead, shareholders are only entitled to receieve a fixed dividend payment and the par value of the shares in the event of a liquidation.
What are “Convertible Preference Shares”?
A type of equity security that entitles shareholders to convert their shares into a specified number of common shares.
What are “Private Equity Securities”?
Securities that are not listed on public exchanges and have no active secondary market.
They are issued primarily to institutional investors via non-public offerings, such as private placement deals.
What is a “Depository Receipt”?
A security that trades like an ordinary share on a local exchange and represents an economic interest in a foreign country.
What is a “Sponsored Depository Receipt”?
A type of depository receipt in which the foreign company who shares are held by the depository has a direct involvement in the issuance of receipts.
What is a “Unsponsored Depository Receipt”?
A type of depository receipt in which the foreign company whose shares are held by the depository has no involvement in the issuance of those receipts.
What is a “Global Depository Receipt” (GDR)?
A depository receipt that is issued outside of the company’s home country and outside of the USA.
What is an “American Depository Receipt” (ADR)?
A US-dollar-denominated security that trades like a common share on a US exchange.
