How private limited company acquired finance for the investment?
2020-09-29 17:18:08
There are four types of financial instrument which private company can issue for corporate financing, as follows:
1. Equity Security
Equity Security are commonly used by corporation to raise their funding. The company will issue a share (or stock) to an investor at a certain par value. Such share will equal a portion of ownership of the company with voting rights. Once the company compensated and satisfied all creditor , the shareholder will be compensated with financial benefit equal to the portion of the share(s) that he/she owned. Such financial benefit will be in a form of dividend payment at the end of the fiscal year.
2. Debt Security
Debt Security is also issue by company to raise funding. This financial instrument is similar to a loan or promissory note which company, as a debtor, issue to the investor, as a creditor, which will legally binding both parties . However, it came in
many types of debt securities, ie. Treasury bills, bonds, bills and debentures.
3. Derivatives
Derivatives are financial instruments that the that company used to acquire capital by issuing a certificate as future, option and/or swaps which representing the rights of the holder to convert their certificate or rights to purchase to new issue share. The investor will receive benefit in the form of interest in the beginning. Once the certificate converted to share, the investor will then receive benefit in form of profit sharing or dividend payment.
4. Investment Unit
This is the instrument or any other evidence that issued by the company to represent the rights of the holder in property in mutual fund . The benefit could be
in either interest or ownership of developed product.
However, in order for the any company or organization in issue this financial instrument and making offer to the general public, it would be heavily regulated by Securities and Exchange Commission (“SEC”) under Securities and Exchange Act B.E. 2535 (1992) and announcement of capital market oversite committee no. TorJor.39/2559.
Subjected to pursuant of Section 33 of the Securities and Exchange Act B.E. 2535 (1992), a company, listed or non-listed, could make offer or sale any financial instruments to general public without authorization of the SEC.
Section 33 “No company shall offer for sale newly issued securities in the category of shares, debentures, bills, certificates representing the rights to purchase shares, certificates representing the rights to purchase debentures, and any other securities as specified by the SEC, unless:
(1) it is an offer for sale of securities which falls within Section 63;
(2) permission is obtained from the Office and Section 65 is satisfied or
(3) it is an offer for sale of the whole newly issued securities by a public limited company to its shareholders in proportion to shares held, provided that full payment for value of the shares offered for sale has been received from the shareholders.”
Before juristic person acquiring any corporate finance, you should consult with your legal advisor.
For more information or further assistance, please do not hesitate to contact us.
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