The company offers the identical deal to all investors regardless of whether the individuals interested in buying just one bond each or corporations buying bonds. The master loan agreement between the corporation and the investors is called a bond indenture.
The indenture contains information that you would expect in any loan agreement such as: The amount of money the company is borrowing. The interest rate the company will pay. The collateral for the loan if any.
However, keep in mind that the value per share can impact the number of votes one shareholder can have.
To avoid this, you can consider reducing the number of shares you issue and setting each share at a higher value. In terms of stock, there are two types of corporations: public and private. Both types may issue stock, but not in the same capacity.
Public corporations allow a practically limitless number of shares, because they can trade their stocks on the public market. There are advantages and disadvantages to both types. Private corporations cannot issue as much stock, but they do not have to register with the Securities and Exchange Commission SEC.
In short, there is less red tape to deal with in a private corporation. The primary disadvantage is that the shareholder limit reduces the potential to raise funds. In contrast, public corporations can raise nearly infinite funds with public investors, but that potential comes at a cost: public corporations must register with the SEC. The SEC requires public corporations to offer disclosures to their shareholders, which inform potential investors about the financial state of the company and what financial risks exist when investing.
The registration can be a bit of a hassle, but it serves to protect both corporations and the general public. If you operate a C corporation , then you have the authority to issue multiple classes of stock, but S corporations can have only one type. The two most popular types are common growth stock and preferred stock. Common growth stock shares grant voting rights to the shareholders, and they have the greatest potential for long-term growth. If the corporation is late on paying dividends or somehow owes a debt to its shareholders, preferred stockholders are paid first.
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