3 - Equities Flashcards
authorized share capital
max share cap
= max no. of shares a company can issue x NV of shares
issued share cap
market cap
share cap alloted to shareholders
= no. of issued shares x NV of shares
no. of shares in issue x market price
free float
no of shares freely trading in public hands
- excludes restricted stocks and insider holding
ordinary and pref shares
priority
divi
voting?
special features
ordinary
2nd priority
variable divi (based on profit)
voting yes
special : redeemable, A/B shares, partly paid, deferred
pref
1st priotiry
fixed divi (against NV of shares, not guaranteed )
gen no voting rites
types: cumulative divi if unpaid, participating (divi variable above fixed level if successful), convertible, redeemable
divi payment timeline
special periods
cum div period - trades with div (usually 2 days before record date a T+2)
ex div date - from this date trades without div (usually thurs)
(usually fri) record date - date at which records inspected to see who gets divi
special ex date - trade without divi in the cum div period. permitted up to 10 days before ex div date
special cum bargains - buy cum div in ex div - permitted up to day before divi payment
why - tax purposes - trading triggers CGT where divi triggers income
ADR - American depository review
features
certificate to represent share in overseas company
bearer docs
typically in currency other than that of issuing currency
Bank buys shares in UK plc using GBP
Bank holds shares in depositary and creates receipt
American investor buys receipt in dollars
Bank collects USD to replace sterling they sold
UK plc pays divi in sterling - bank converts to USD and passes to ADR holder
voting rights exercised through depository bank
features
- USD denonimated and USD divi
- bearer doc
-no stamp duty
-T+2
- rights issues: DR holders recieve cash
-bonus issues: althers numbers of shares
DR pre release
DR risk
can be issed before depositing of secs at depositary for up to 3 months - though USD collateral is required
risks:
market and company specific risk
FX risk
ADR vs global depository receipt
American depositary receipts (ADRs) are issued on US markets.
Global depositary receipts are issued on non-American markets.
