Issuance of Shares - Part III
This lesson is the FINAL lesson in a FIVE part series dealing with the ways a corporation is financed, that is, the ways in which a company raises money to pay for its ongoing operations. BEFORE beginning this lesson, you should have completed ALL of the previous lessons and have mastered the concepts introduced in each of the previous lessons. This lesson builds on those earlier lessons. The FIRST lesson in the series is called Types of Securities, Corp27L. It describes the characteristics of debt and equity securities and introduces the student to the reasons a company might use both debt and equity to finance a corporation. The last four lessons deal with the legal rules that apply to raising money by issuing shares of stock in the company. The SECOND lesson in the series, Issuance of Shares Part I, Corp 28L, covers the concepts of equity capitalization, par value, the requirements and use of stated capital, capital surplus, and earned surplus, and the definition of treasury shares. The THIRD lesson, Issuance of Shares Part IIA, Corp30L, discusses what it means for stock to be designated as fully paid and validly issued and the related requirement that shares of stock be paid for with the proper TYPE of consideration. The FOURTH lesson, Issuance of Shares Part IIB, Corp34L, continues the discussion of fully paid and validly issued stock and the related requirement that the stock be paid for with the proper AMOUNT of consideration. The lesson also addresses the consequences of failing to meet these requirements. This FINAL lesson, Issuance of Shares Part III, Corp37, deals with the mechanics of issuing equity securities and the related concept of preemptive rights.