Issue of shares: what is it?

The charter capital of AO consists of a nominalvalue of its securities. Issue of shares and their placement is carried out directly at the establishment of the company (among its participants), as well as in case of a decision to increase the authorized capital by means of additional shares (or when converting other securities into them).

Such securities as shares, confirm the rightholders of a share in the capital of the company, as well as all the rights that result from this (management, part of the profits, disposal of shares, etc.). They are perpetual documents, which terminate circulation only with the withdrawal of their issuer from the market.

The issue of shares is a necessary measure, which is used by most companies in cases when they need additional funds for development. This is the best alternative to loans and the search for investors.

Issue of shares - issue of securities,carried out in strict order of law. Regulation of the procedure at the state level is conducted in order to protect investors against possible dishonesty of issuers.

It is possible to conduct several issues of shares: ordinary and preferred (with a nominal value of not more than 25% of the charter capital).

Additional issue of shares is accompanied byamending the Charter. Its main stages are: decision-making on the issue, registration of the issue, the production of certificates (with the documentary form of the issue), the direct placement of securities and the further registration of the report on the results of their release.

If the number of shareholders is more than 500 (or the total value of shares is more than 50 thousand minimum wages), then it is required to register the prospectus (in this case, the issue is considered public).

Additional issue of shares is a complex and rigidly regulated procedure that requires extremely transparent reporting and transparency of information about the issuer.

When registering the issue, they are agreed (in writing)obligations of the issuer, and the whole issue is assigned a state number. In public issue, the company must provide investors with free access to the information they need. The company must publish activity reports (quarterly reports of the issuer with data on the financial state). Placement of shares can begin only after the registration is over.

The decision on the additional issue is taken by absolutely all participants of the company at the general meeting of shareholders.

The scope of the rights granted to the shareholder,depends on whether it is ordinary or privileged. Dividend payments are directly proportional to the financial performance of the company for the year. The company has the right to make a decision on non-payment of dividends, instead directing profits for the development of production.

The issue of shares contains risks, sincethe issuer may err in the calculations, as a result of which additional securities will not be placed (they will not be bought by potential investors), which will reduce the cost of already listed shares.

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