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CSC course- FIP > ch.11 > Flashcards

ch.11 Flashcards

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

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

A

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

23
Q

negotiated offering

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

A

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

25
Q

issued shares

A

part of auth shares that have been issued by corp

26
Q

outstanding shares

A

part of the issued shares which remain outstanding and owned by shareholders of company

27
Q

outstanding shares

A

part of the issued shares which remain outstanding and owned by shareholders of company

28
Q

market capitalization

A

total dollar value of company based on current market price of issued and o/s shares

29
Q

Public float

A

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
Q

mortgage bonds

A

backed by specific pledge of asset- land, property

31
Q

debentures

A

backed only by general credit of corporation

32
Q

adv/disadv of issuing securities

A

later

33
Q

Methods of offerign

A
  • Private placement

- Public offering

34
Q

Private placement

A

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
Q

Public offering

A

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
Q

treasury shares

A

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
Q

Prospectus

A

• Detailed descriptions of securities offered and issuing corporation

38
Q

material fact

A

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
Q

Preliminary prospectus

A

disclosure document, and to solicit expressions of interest from potential buyers of security

40
Q

final prospectus

A

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
Q

green sheet

A

information circular for in house use only

42
Q

short form prospectus

A

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
Q

after market stabilization

A

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
Q

over allotment options

A

§ 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
Q

Penalty Bid

A

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
Q

Escrowed shares

A

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
Q

Capital Pool company (CPC)

A

vehicle to provide businesses with opportunity to obtain financing earlier in development than might be possible with regular IPO

48
Q

nex

A

separate board of TSX venture exchange that provides trading forum for companies that have fallen below venture exchg listing standards

49
Q

temp withdrawal- Detailed opening

A

Before opening of trading, echg can order tradign be delayed

if heavy influix or buy/sell orders for particular security.

50
Q

Temp withdrawal- Halt in trading

A

to allow significant news to be reported and widely disseminated

51
Q

Suspension in trading

A

§ 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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