Securities & Corporate Finance
Generally, securities laws govern the conditions under which corporations, as well as other business entities, can issue securities. A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt and equity securities such as bonds and common stocks respectively. The corporation or other entity issuing the security is called the issuer. A person or organization which holds at least a partial share of stocks is called a shareholder. The aggregate value of a corporation's issued shares is its market capitalization.
In the United State, the issuance and transfer of securities are governed by federal law and overseen by the Securities & Exchange Commission, and state law, commonly refered to as blue sky laws. Each state's blue sky law is administered by its appropriate regulatory agency, and most also provide private causes of action for private investors who have been injured by securities fraud.
Financing a company through the sale of stock in a company is known as equity financing whereby the shareholder becomes an owner in the company. Alternatively, debt financing (for example issuing bonds) is essentially a loan to the company and can be done to avoid giving up shares of ownership of the company. A hybrid security, often referred to as "hybrids", is a broad group of securities that combines elements of two securities, such as debt and equity.
Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholders' rights to a company's assets are subordinate to the rights of the company's creditors. This means that shareholders typically receive nothing if a company is liquidated after bankruptcy.
How We Serve Our Clients
It does not matter whether your company does business on Wall Street or Main Street, raising capital and financing operations are always a serious concern for any growing business. A revolving line of credit at a local credit union or five maxed-out credit cards in the CEO's name is not necessarily the most prudent means of infusing capital into new or developing business. At the Wenger law firm, we can assist you in choosing an equity, debt, or combination of securities that will work best for you. Moreover, we can work closely with you in finding sources of capital to help your business grow. Our goal is to not only help to secure the additional capital but to educate you in the process regarding some of the common pitfalls in such matters as private placements, angels and venture capitalists, public offerings, accredited investors, and convertible securities.
