Understanding Corporations, Shares, and Financial Investments
Corporations
A corporation is an organization formed by one or more partners, either natural or legal persons, who are not personally liable for the debts of the entity. It requires a minimum capital of 60,101.21 euros, divided into registered or bearer shares, which can be cumulative or indivisible.
Classes of General Meetings
Annual General Meeting
The Annual General Meeting must be held within six months of each financial year. It is called to review management, approve social accounts (if appropriate), and decide on the application of results.
Extraordinary General Meeting (EGM)
An EGM is any meeting that does not meet the characteristics of an Annual General Meeting or a Universal Board. Several EGMs may be held per year at any time.
Universal Meeting
A Universal Meeting is deemed validly convened to discuss any matter, provided that all the capital is present and the participants unanimously agree to its conclusion.
Management Body
The management authority and representation of these companies are made up of administrators. This role can be performed by a single member or multiple individuals. Administrators can act independently (solidarity), jointly, or as a Council, where decisions are taken by absolute majority.
Shareholders’ Rights
- Right to receive dividends.
- Right to participate in net assets resulting from the liquidation of the company.
- Preferential subscription rights.
- Right to vote at general meetings of shareholders.
- Right to information.
- Right to challenge corporate resolutions.
Classes of Shares
- Common shares
- Preference shares or preferred shares (granting special rights to the founders)
- Non-voting shares (paid a minimum annual dividend)
- Redeemable shares (redeemed and canceled at the request of the company, the partner, or both)
Released and Partially Released Shares
In the subscription, it is not necessary to pay the full amount (the unpaid part is considered free). This is done to provide guarantees.
Period of Operations
In the market, transactions can also be made on credit. Sales or purchases are settled in cash, but the shares or the money for the operation are borrowed.
Stock Orders
- At best: Buy titles at the lowest possible price and sell at the highest in the first listed session.
- On credit: Sales or purchases are settled in cash, but shares or money are borrowed for the operation.
- Limited: A lower price is set for buying and a higher price for selling.
- Order around: A limit order with a range of oscillation.
- Linked orders: The purchase of one security is linked to the sale of another.
Blue Chips
Blue chips are shares that are expected to be revalued in the short term and provide substantial interest.
Options
- Call: The right to acquire the underlying asset at a predetermined price (exercise price) when the contract expires or at any time before it.
- Put: The right to sell the underlying asset at a predetermined price (exercise price) when the contract expires or at any time before it.
Futures
Futures are the obligation to buy or sell an underlying asset at a predetermined price on a set date.
SICAV (Collective Investment Scheme in Transferable Securities)
A SICAV requires a minimum capital of 2,400,000 euros, fully subscribed and paid, divided into shares. The statutes establish a maximum capital that cannot exceed ten times the initial capital. Partners make contributions and withdrawals, causing the capital to vary.
Financial Investment Funds
Financial investment funds are assets invested in financial assets owned by a group of investors called stakeholders. The fund has no legal personality, and its administration and representation are handled by its management company.
Accumulation and Distribution Funds
Accumulation funds do not distribute benefits, while distribution funds distribute benefits regularly.
Money Funds
Money funds consist of public and private debt securities with very short-term maturities.
Mixed Fixed Income Funds
Mixed fixed-income funds invest most of their portfolio in fixed-income securities and a small percentage in shares.
Mixed Equity Funds
Mixed equity funds have a high percentage of equities and a portion of their portfolio in debt.
Listed Investment Funds
Listed investment funds are funds whose shares may be listed on a stock exchange.
Free Investment Funds
Free investment funds are aimed at very aggressive investors and are not subject to restrictions on management fees and deposits.
Real Estate Investment Funds
Real estate investment funds are created to finance the construction of rental housing. They must invest at least 90% of the money they receive from their members in this asset class.