Stock and Other Corporate Securities Flashcards
What are the 2 classifications of shares ?
- Common Shares
- Preferred Shares
Common Shares
Are a basic ownership interest and can vote on governance matters ; there are no special conditions on common shares
Preferred Shares
Have preference over other stock with regards to distribution, may have special voting rights
Debt Securities
Create a debtor-creditor relationship between a corporation and outside creditors who lend funds to the corporation. May be a bond or debenture
Authorization to issue stock
Is by the board of directors unless otherwise stated in the articles of incorporation
Issued and outstanding shares
Issued shares are considered outstanding until they are reclaimed or canceled by the corporation
Fractional shares
A corporation may issue a “scrip” that represents a fractional share
What rights does a fractional shareholder have ?
The fractional shareholder has the rights of a full shareholder, however the board of directors may place conditions of a scrip
Unauthorized shares
Shares that are not authorized in the articles of incorporation are void
What needs to be on a share (4) ?
- The name of the corporation
- That is incorporated in VA
- The name of the shareholder
- The number and class of shares
Consideration in the issuance of shares
Shares are issued in exchange for any benefit to a corporation. May include cash, property, services, a promissory note, or any other binding obligation.
Valuation of consideration for shares
The board of directors determines if the consideration received is adequate
What is par value stock ?
A corporation may issue par value stock which states that the corporation is required to receive at least the minimum value assigned to the stock (the part value which is specified in the articles)
