LO 1.f

Question 1

What is stock rights or preemmptive rights?

Answer 1

The shareholders right to maintain their proportion ownership of shares by buying issued shares beforw offered to public.

Question 2

A rights offering…

Answer 2

Allows stockholders to purchase common stock below the current market value. The rights are valued separately from the stock and teade in the secondary market diring the subscription period, which is typically 30-45 days.

Existing holders receive 1 right per share owned. The # of rights required to purchase one share of the new issue depend on the # of outstanding share and the # of new shares offered.
Short term

Question 3

Warrants

Answer 3

A certificate granting its its owner the right to purchase securities from the issuer at a specified price. ( normally the price is higher than the market rate at the time the warrants are issued)
Longterm, bundled with other securities

Question 4

Rule 144

Answer 4

Applies to shares that are sold through a non standard offering and are subject to resale restrictions and to sales hy persons who are classified as a control person (insider) of the issuer.

Question 5

Restricted Stock

Answer 5

Securities acquired through some means other than a registered public offering. Purchased in a private placement, may not be sold til held fully paid for 6 months.
Before sold the certificate warning about the holding restriction must be removed- sometimes called legended or legended certs. The restriction will not apply once sold.

Question 6

Control Stock

Answer 6

Stocks owned by directors, officers, or persons who own 10% or more of the issuers voting stock.
Familes will aggregate their positions to determine the percentage of ownership. In an Control persons (affiliate) wants to sell shares they must complete a form 144. The form used to determine the # of shares the control person may sell over a 90 day period.