Financing and Listing Securities

Governments and corporations often need to raise capital to finance their operations, which they do through the financing process (also known as underwriting). Government financing is often accomplished through an auction process, and occasionally through a fiscal agency.

When a corporation decides to undertake financing, it secures the services of a dealer. The dealer provides advice to the corporation about the security's specific attributes (e.g. interest rate, redemption process, and refunding provisions). The dealer may also provide advice on various protective clauses of bonds called protective provisions, trust deed restrictions, or covenants. These clauses appear in the trust deed.

Through the competitive tender system. The securities are issued by way of an auction, whereby the amount won at the auction is based on the bids submitted.

<p>Corporate financing is a careful balancing act in which the dealer must balance the needs of the corporate client seeking funds with those of the investing public who provide the funds.</p> Signup and view all the answers

<p>Authorized shares are the maximum number of shares (either common or preferred) that a corporation may issue under the terms of its charter.</p> Signup and view all the answers

<p>Issued shares consist of the portion of authorized shares that the corporation has issued, either to the investing public, to company insiders, or to large institutional investors such as a mutual fund.</p> Signup and view all the answers

<p>Public float refers to that portion of outstanding shares that are freely available for public trading.</p> Signup and view all the answers

<p>Corporations raise capital by selling shares (equity financing) or by issuing debt or fixed-income securities (debt financing).</p> Signup and view all the answers

<p>A corporation's management negotiates with a dealer to determine the type of security, price, interest, or valuation multiple, as well as any special features and protective provisions that may be needed to ensure the success of the new issue.</p> Signup and view all the answers

<p>The dealer provides a variety of important services to the corporation during the financing process. The dealer reviews the corporate structure, financial record, financial structure and future prospects of the corporation. Based on the dealer's assessment of current market conditions, investor preferences, the impact of various financing options on the corporation's existing capitalization, future earnings stability, and prospects, they recommend an appropriate financing vehicle.</p> Signup and view all the answers

<p>Mortgage bonds</p> Signup and view all the answers

<p>In a private placement, the entire issue is sold to one or several large institutional investors. The issuer solicits one or more large investors such as banks, mutual fund companies, insurance companies, or pension funds. Placements are generally offered to sophisticated investors and institutional clients.</p> Signup and view all the answers

<p>In a public offering, the corporation and the dealer come to a preliminary agreement to determine if the dealer will act as an agent or as a principal.</p> Signup and view all the answers

<p>Most provinces require the filing of both a preliminary prospectus (also called a red herring prospectus) and a final prospectus.</p> Signup and view all the answers

<p>A final prospectus must contain complete details of the securities being offered for sale. In other words, it must provide the required full, true, and plain disclosure of all material facts relating to the securities to be distributed.</p> Signup and view all the answers

<p>This system shortens and streamlines the procedures for qualified issuers to access Canadian securities markets through prospectus offerings.</p> Signup and view all the answers

<p>After an issue is brought to market, one of the duties of the lead dealer may provide after-market stabilization of that security's offering.</p> Signup and view all the answers

<p>The main advantages include company prestige and goodwill, established and visible market value, excellent market visibility, more information available, simplified valuation for tax purposes, and access to a wider market.</p> Signup and view all the answers

<p>Shortly before the opening of trading, an exchange can order trading in a security to be delayed.</p> Signup and view all the answers

<p>A temporary halt in trading of a security can be ordered or arranged at any time to allow the reporting and communication of significant news, such as a pending merger or a substantial change in dividends or earnings.</p> Signup and view all the answers

<p>Trading privileges can be suspended for more than one trading session. Suspensions in trading are imposed for various reasons.</p> Signup and view all the answers

<p>Delisting is the cancellation of listing privileges. A security can be delisted for reasons such as redemption (in the case a preferred share), substitution for another security (as a result of a merger), the company being without assets or going bankrupt, the public distribution of the security reaching an unacceptably low level, or the company failing to comply with the terms of its listing agreement.</p> Signup and view all the answers

<p>Crowdfunding is the process of raising start-up capital by soliciting contributions from the public at large, usually aided by online or Internet-based systems.</p> Signup and view all the answers

<p>A listed junior company may decide that it must raise new capital through a distribution of treasury shares to the public. The company must find a dealer member to act either as its underwriter or agent for the offering.</p> Signup and view all the answers

<p>A company may decide to offer an incentive to an underwriter to provide risk capital as a principal, rather than having the underwriter merely act as agent for the offering.</p> Signup and view all the answers

<p>For small, emerging private companies, the costs associated with going public through a traditional IPO are not always financially viable. Accordingly, the TSX Venture Exchange, home to many emerging Canadian businesses, developed the CPC program.</p> Signup and view all the answers

<p>When a company wants to be listed on a recognized exchange, it must apply and be accepted for trading. The application form is a lengthy questionnaire designed to obtain detailed information about the company and its operations. When the listing application is completed, and supporting documents are assembled, the company signs a formal listing agreement.</p> Signup and view all the answers