Final Prospectus
- Due 25 days after effective Date
- OTC not on NASDAQ
- 90 days if corporation hasn’t previously issued stock to the public
- 40 Days if stock has been previously listed
Well Known Seasoned Issuer
1
Preferred Stock Optional Features
Cumulative
- Cumulative - max dividend stock will pay
- will received dividends that would have been paid in the past when a dividend is declared
Preferred Stock Optional Features
Adjustable
- Adjustable - changes based on a benchmark security such as a T-bill
- because the dividend adjust or “floats”, the stock price stays stable
Preferred Stock Optional Features
Convertible
-Convertible - dividend and bankruptcy protection with potential price appreciation of common stock
-issues a lower stated dividend
-conversion price and conversion ration determined at stocks issuance
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Preferred Stock optional features
callable
-buyer paid par or specified premium over par
Preferred Stock optional features
Participating
-allows preferred to participate with common shares in earnings of exceptional year
Preferred Stock - (Straight/Basic)
-Created to yield a fixed stated return comparable to bonds
-Paid before common stock
-expressed as a % of par value (typically $100)
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Warrants
- long term devices
- issued with an exercise price above market
Settlement Date -
Corporate Securities:
- regular way: normally 3 days after trade date
- cash settlement: trade and settlement same date
Rights of common stockholders
- vote
- transfer ownership
- received dividends once declared
- inspect corporations books
- preemptive rights
- junior claims in event of liquidation
What’s on a Stock Certificate?
- issuing corporation
- registered owner
- registrar
- transfer agent
- # of shares
- authorized signature of corporate officer
Transfer Agent
one who changes buyer and seller name on stock cert
Registrar
oversees transfer agent to make sure number of shares equal outstanding shares
Stock Dividends
stock is given instead of cash
Statutory and cumulative voting
- statutory - can vote # of shares per director
- cumulative - can for # of shares * number of directors and then cast any number of votes to a director
Issues Stockholder votes on
- election of directors
- Decision about changes in the operations of the company
- stock splits
- issuance of additional securities.
Splits
-stock distribution of more than 25% of outstanding stock
D E R P
- Declaration date - board declares it and it becomes a current liability
- Ex dividend date - SRO sets, stock purchaser on this date is not going to receive dividends
- Record Date - corp consults books to see who is on record to get dividend
- Payable Date - Dividend is Distributed
Right to inspect books
Shareholders have the right to regularly review the books
- 10q - quarterly - 10k - annualy
Preemptive rights
- stockholders right to maintain the same % of ownership when new shares are issued by first right to purchase more shares
- subscription price - price can purchase at - lower than POP
- rights are usually 30-60 days after new shares are issued
- can sell the rights
ADR
American Depository Receipts
- issued by US commercial bank
- allows American investor to purchase shares of a foreign company on an american exchange
- has currency risk
Bankruptcy Priority
- Employee Back Wages
- IRS - taxes Due
- Mortgage and lien holders
- Secured bond holders
- UnSecured bond holders (debentures) & general creditors
- Subordinated debentures
- Preferred Stockholders
- Common Stockholders
Types of Shares
Authorized - total number
Issued - portion sold to investor
Unissued - not sold yet
Treasury Stock - Issued stock bought back
Outstanding Stock - number of shares in hands of investors at anytime “Issued - Treasury”
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Issuing - Primary Markets 8%60
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Trading - Secondary Market 6%82
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Option Contracts 16%88
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Customer Accounts 6%46
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Investment Companies 7%62
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Direct Participation Programs 6%24
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Insurance Contracts 4%18
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Retirment Plans end Education Plans 6%17
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Analysis - 9%59
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Regulations 10%20
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Equity securities24
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Debt Instruments 16%116
