| what is equity finance? | the classical relationship is between the company selling its shares and the shareholders who purchase those shares as a means of providing finance to the company in return for an equity in the company. The shares purchased embody something akin to a statutory contract and therefore represent the interest of the shareholder in the company, which determines not only their liability to the company but also their entitlements in the company. |
| who are members? | members include:
-subscribers to a company’s memorandum as deemed members
-any person who agrees to become a member and whose name is entered into the register of members |
| who are underwriter/bookrunners? | investment banks who guarantee to purchase a proportion of any unsold shares when shares are offered for sale to the public |
| who are stockbrokers? | agents that buy and sell shares or other securities on a stock exchange on behalf of clients in return for a commission |
| what are stock exchanges? | these are markets for the sale and purchase of various securities, including shares |
| what is a share capital? | the part of a company’s capital that comes from the issue of its shares, that is, capital received from its owners (members or shareholders). |
| what is a debt finance relationship? | the existence of a present obligation on the debtor to make a money payment to the creditor as set out in the agreement. |
| what is a debenture? | an instrument that creates or acknowledges that a debt falls |
| what is security? | a secondary promise given to the creditor by the debtor that creates certain rights over the debtor’s assets in favour of the creditor if the debtor defaults or breaches the terms of the loan agreement |
| what is a guarantee? | a secondary, or parasitic, form of liability. If the main contract is void, the guarantee falls with it, as there is no obligation under the main contract for the guarantor to assume. The holder of the guarantee (the creditor) cannot pursue the guarantor (the third party) unless the debtor has failed to pay. For a guarantee to be enforceable, it must be evidenced in writing |
| what is a indemnity? | an independent obligation on the part of the third party that is not reliant upon the status of the primary contract. In other words, the holder of the indemnity (the creditor) can pursue the party giving the indemnity without first pursuing the primary obligated party (the debtor). A useful example of indem- nity agreements is contracts of insurance |
| what is a retention of title? | quasi-security agreements that prevent property in the goods from passing from the seller to the buyer until the buyer has paid the price of the goods or all debts owed to the seller. |
| what is factoring? | the sale of receivables as a means of raising finance. a typical factoring agreement will affect the rights and/or obligations of at least three parties vis-à-vis the assigned receivables notwithstanding that the transaction was concluded between two parties: the client and the factor. |
| what are receivables/book debts? | monies payable to a client by its debtors or other persons |
