Non-voting stock or limited voting stock is stock of a corporation that is generally preferred stock. These shares do not provide the owner of the shares the right to vote for directors and on other important matters. Non-voting stock is sometimes issued by newly formed corporations that have acquired the assets of another corporation in connection with a business acquisition. The non-voting stock may be issued to the seller of the acquired assets. This has the effect of reducing the cash that needs to be paid for the assets while providing the seller of the assets with an ownership interest in the new company.

Redeemable preferred stock is a type of stock that grants the issuer the right to buy the stock back on a specified date or thereafter. Redeemable preferred stock is also known as callable preferred stock.

 

Distribution of Dividends to Shareholders or Distribution of Interest to Bondholders

There are advantages and disadvantages to paying dividends to shareholders as opposed to paying interest to bondholders. Paying dividends to shareholders results in double taxation. The corporation pays tax on its income and then shareholders pay tax on dividends received. Paying out interest to bondholders is a deductible expense while bondholders pay taxes on interest received. Whether to distribute dividends to shareholders or pay interest to bondholders is a decision every board of directors must make.

 

 

Loan Stock

Loan stock refers to common or preferred stock that is used as collateral to secure a loan from a financial institution or other party. The loan can be based upon either a fixed or adjustable interest rate. Lenders usually maintain physical control of the stock until the loan is repaid.

 

All Risk Insurance

All-risk insurance covers all causes of loss or damage to property except for specific risks explicitly excluded in the policy, making it very broad. Unlike named perils policies that only cover listed causes, all-risk policies provide coverage for anything not specifically excluded, such as floods, earthquakes, or war. If a loss occurs, the insurer must prove it falls under an exclusion for the claim to be denied; otherwise, it's covered.

 

Stock Split

A stock split is an action by the board of directors of a corporation that increases the number of shares by splitting the outstanding stock. This decreases the price per share while increasing liquidity. A stock split has no effect on the total market capitalization of the company or its value. Reverse splits are the opposite.