LAW 3102 Chapter 34: Ch 34-Equity
Document Summary
An equity security is a source of capital creating an ownership interest in the corporation. Financially riskier than creditors, bear the impact of changes in the corporations fortunes and general economic conditions. Shares confer on their owner a threefold interest in the corporation. The right to participate in the earnings of the corporation. The right to participate in the residuation assets of the corporation upon dissolution. A corporation is limited to selling only the amount of shares that has been authorized in its articles of incorporation. Cannot be increased or decreased w/o mending the articles of incorporation. When additional shares are issued, a shareholder may have the preemptive right to purchase a proportionate part of the new issue. The revised act adopts the opt-in approach: preemptive shares are nonexistent unless the charter provides for them. Par value: indicates only the minimum price that the corporation must receive for the share.
