WEEK 1: RAISING FINANCE - EQUITY

Limited Liability Company

A company structure that limits the owners' financial liability to the amount they invested.

Corporate Entity

A legal personality separate from its members that can sue and be sued.

Equity Finance

The raising of capital through the sale of shares in a company.

Seed-Corn Finance

Initial funding typically used for research and development before a company launches commercially.

Authorized Capital

The maximum amount of share capital a company is allowed to issue as stated in its Memorandum of Association.

Issued Capital

The portion of authorized capital for which shares have been issued and are in circulation.

Share Premium

The amount by which a share's issue price exceeds its nominal value.

Dividend

A payment made to shareholders from a portion of a company's earnings.

Bonus Issue

The conversion of reserves into free shares for existing shareholders, proportional to their holdings.

Rights Issue

A method by which a company raises funds by issuing new shares to existing shareholders at a discount.

Venture Capital

Finance provided by specialized institutions to new or developing businesses with high risk but potentially high returns.

Principal-Agency Problem

A situation where the interests of managers (agents) differ from those of the shareholders (principals).

Accountability in Venture Capital

The need for companies to keep investors regularly informed of progress and financial status.

Liquidation of Investment

The process where shareholders sell their shares for a capital gain when their value has increased.

Public Listing

The process of offering shares of a private corporation to the public in a new stock issuance.

Preference Shares

Shares that have priority over ordinary shares when it comes to the allocation of profits and assets.

Ordinary Shares

Equity shares that carry voting rights and provide dividends based on company performance.

Management Buy-Out

A transaction where a company's management team purchases the assets and operations of the business they manage.

Short-Term Finance

Funds raised to improve a company's cash position for a short duration.

Tighter Credit Control

Stricter policies put in place to ensure timely payments from customers.

Just-In-Time Inventory

An inventory management strategy that aligns raw material orders with production schedules.

AIM (Alternative Investment Market)

A sub-market of the London Stock Exchange aimed at smaller companies.