Company Law Exam - Funding and Security
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9 Terms
What are the 2 main ways of Company Raising Finance?
Debt Financing and Equity Financing
What is Debt Financing
Company borrows money from Bank etc or Debt Securities (money from investors which they must pay back)
What is equity financing
When a company puts at an IPO (Initial Public Offering) and issue shares
What are the Lender Securities?
Debentures, Mortgage over real property, Fixed Charge over Cash Deposit & Floating Charge
Considerations on funding choices
Debt = Debt however you Keep control
Equity = Loss of Ownership but no Debt
What is the Mortgage over Real property
Lenders will take security over real property that the borrower owns with intention of making the borrower obligated to pay back the debt
What is a Debenture
When lender takes security over all assets of the borrower
