Raising Capital: Venture Capital, Public Issues, and Rights Offerings
Raising Capital
Venture Capital
Venture Capital is private financing for relatively new businesses in exchange for stock. The ultimate goal is usually to take the company public, and the venture capitalist will benefit from the capital raised in the initial public offering (IPO).
Public Issue
A public issue is the creation and sale of securities that are intended to be traded on the public markets.
Steps in Issuing New Securities to the Public
- Management must obtain permission from the Board of Directors.
Understanding the Stock Market and Financial Assets
Stock Market
The Stock Market is one where monetary resources are exchanged for financial assets.
Finance Companies (Private Finance) (Variable Debt)
And Company Limited Partnership.
The capital of companies is divided into shares, and each represents a title.
The company may eventually expand the capital that involves a new breed of actions, divided into the old shareholders who have preferential subscription rights to purchase new shares.
You can also issue bonds. Who gets a duty has the right to collect
Read MoreFinancial Markets: Understanding Securities, Institutions, and Risk
A market is a place where buyers and sellers meet to exchange something of value. This exchange is mutually beneficial and involves non-coerced transactions.
What are Financial Markets?
A financial market is a market in which financial assets (securities), such as stocks and bonds, can be purchased or sold. Financial markets transfer funds from those who have excess funds to those who need funds.
- Surplus units: Participants who receive more money than they spend, such as investors.
- Deficit units: Participants
Share Buyback: Legal Requirements and Process
Share Buyback: Legal Requirements and Process
The provisions for the buyback of shares were introduced in the Companies Act, 1956, effective October 31, 1998, and SEBI regulations, 1999.
- Section 68 of the Companies Act, 2013 empowers a company to purchase its own shares and other specified securities.
- Buyback refers to the purchase by the buyer of something already sold by the said buyer.
- Buyback of shares means the purchase of its own shares already issued by the company.
- It is a process by which a
Business Financing: Sources and Types
Classification of Sources of Financing
A. According to Ownership:
- Own Financing: Funds are owned by the company. For example, capital from partners.
- Foreign Financing: Funds are not owned by the company. For example, bank loans.
B. According to the Source:
- Internal Financing: Funds come from inside the company. For example, undistributed profits that are within the reserves.
- External Financing: Funds come from outside the company. For example, credits extended by suppliers.
C. According to the Term:
- Long-
Understanding Company Finances: Liquidity, Solvency, and Debt
Liquidity
Liquidity is the ease with which an asset can be converted into cash without significant loss of value. It represents the ability of a company to meet its short-term payment obligations to suppliers, workers, banks, etc. A company has liquidity if it can meet all its short-term payment obligations.
When a company lacks liquidity, it previously was said to be in default. Now, it enters into an arrangement with creditors. This situation is overseen by a judge. A group of experts, appointed
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