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CORP FINANCE - 1. Organizational Forms, Corporate Issuer Features and…
CORP FINANCE - 1. Organizational Forms, Corporate Issuer Features and Ownership
1) Compare the organizational forms of businesses
Sole proprietorship
Profits are then taxed as personal income of the owner
General partnership
partnership agreement
specifies each partner's responsibilities for business operations and their shares of the partnership profits or losses
Limited partnership
limited partners
who are liable only for the amount they invest in the partnership
feature that distinguishes a corporation, or limited company
public corporation (or a public limited company
2) Describe key features of corporate issuers
A corporation's legal identity is separate from that of its owners and is formed by filing an
articles of incorporation
Shareholders have voting rights that allow them to elect the board of directors
The board of directors may distribute a portion of the company's earnings to the shareholders as dividends.
3) Compare publicly and privately owned corporate issuers
Most
public limited companies
are listed companies
company's free float
A company can become public by issuing shares in an initial public offering (IPO).
To conduct an IPO, the company must meet exchange-specific requirements
Shares in
private limited companies
do not trade on an exchange.
As a result, their value is not readily observable, and transfer between investors is difficult
can raise equity capital through private placements of securities.
Private placements are typically restricted to accredited investors such as corporate and institutional investors or high net worth individuals.
In a
direct listing
, a stock exchange agrees to list a private company's existing shares
special purpose acquisition company (SPAC)
is a corporate structure set up to acquire a private company in the future