FINANCIAL GLOSSARY








Below is a glossary of financial terms written by us.
Simply click on a term to access its definition.
[For a correct use of this glossary, please consult these "notes"]

puce S Corporation (or Subchapter S Corporation) (USA)

A small business corporation, with 75 shareholders or less, taxed as if it were a partnership or individual proprietorship (no corporate tax; corporate losses can be claimed by the shareholders and corporate profits are taxed directly to the shareholders).
See also Limited Liability Company.

puce Schedule 13 D (USA)

A form required to be filed with the SEC by any person or entity that acquires a 5% or greater ownership interest in a public company; setting forth identifying information about the investor, the source of funds used to purchase the securities and, most importantly, the investor's intent with respect to attempting to make control of the issuer.

puce Schedule 13 G (USA)

A short form of Schedule 13-D that some 5% owners (banks, mutual funds, etc.) who do not intend to assert any control can file in lieu of filing a Schedule 13-D.
Also used for persons who acquired their 5% interest prior to an issuer's IPO.

puce Scission / Spin Off

Sale of a department or a division of a company to make it an independent company.

puce Scout

A person who is looking for attractive investment opportunities on behalf of venture capital companies.

puce SEC

[Securities and Exchange Commission]
The primary USA federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets.

puce Second Preferred Stock

Preferred stock whose rights are subordinated to those of other preferred stock on dividend and assets.

puce Second Stage

Funds which are invested in a company in its early expansion phase.

puce Secondary Distribution/Shares (or Secondary Offering)

A public offering of a security by a selling holder of securities.
See also Primary Distribution/Shares for comparison.

puce Secondary Fund

A fund of funds that invests in existing Private Equity Funds considered being mature.
This strategy is supposed to offer a certain degree of liquidity to investors who wish to dispose of their investment.

puce Secondary Investment

Investment in an existing Private Equity Funds or purchase of an investment from another investor.

puce Section 16 (USA)

A provision under the Securities Exchange Act of 1934 regulating trading by corporate insiders.
It provides that any profit realised by an insider from any purchase and sale of stock of such company within any period of less than 6 months shall be deemed to belong to and to be recoverable by the company.
Section 16 also requires insiders to report all trades in a company's securities.
See also Short Swing Profits and Reporting Company Forms 3, 4 and 5.

puce Secured Obligation

A debt obligation which is secured by the pledge of assets.

puce Securities Act of 1933 (also “1933 Act” or “33 Act”) (USA)

A Federal law regulating the offer and sale of securities by the issuer or its affiliates.
It generally requires issuers seeking to raise funds from the public to provide investors with extensive information.
They are liable for any false information, particularly for incorrect registration statements.

puce Securities Exchange Act of 1934 (also “1934 Act” or “34 Act”) (USA)

A Federal law which regulates stock markets, trading in stock markets, and on-going disclosure by public companies traded on those stock markets.

puce Security

Piece of paper that proves ownership of stocks, bonds and other investments.

puce Seed Capital

Initial capital for a start-up venture, usually provided by the founders, friends or relatives, but that also may be provided by seed venture capital firms.
Typically seed capital is provided in order to develop a business concept before a company is started.

puce Seed investment/Seed money

The first round of investment for a start-up business.
Seed money usually takes the structure of a loan or an investment in preferred stock or convertible bonds, although sometimes it is common stock.
Seed money provides startup companies with the capital required for their initial development and growth.
Angel investors and early-stage venture capital funds often provide seed money.

puce Senior

Adjective to describe a security characterized by a relatively higher priority for repayment in case of liquidation.

puce Senior Debt

A debt instrument which expressly has a higher priority for repayment than that of general unsecured creditors.
Typically used for long-term financing for low-risk companies.
See also "Subordinated Debt."

puce Share

puce Shareholders

The persons who own shares of either common or preferred stock.

puce Shareholder's Agreements

Agreements made by shareholders amongst themselves, or by shareholders with the company, and that aim at settling in advance the operating mode of their relationship with the company.

puce Shareholders capital

puce Shares

Certificates or book entries representing ownership in a corporation or similar entity.

puce Shares Outstanding

See Outstanding Stock.

puce Shark Repellent

Defense mechanisms or tactics designed to discourage undesired take-over bids.
See also Anti-Take-over Provisions, Blank Cheque Preferred Stock, Poison Pill and Staggered Board of Directors.

puce Sharpe Ratio

In placements, expected additional income based on risk unity.
The higher that figure, the better the portfolio for the investor.

puce Shelf Registration (USA)

A registration statement that covers securities that are not to be sold in a single offering but are proposed to be sold over a period of time or on a continuous basis.

puce Shell / Shell Company

Refers to a duly organised corporation currently existing but not yet operational.

puce Shoe

See Green Shoe or Shoe.

puce Short Sale

Borrowing a security from a broker and selling it, with the understanding that it must later be bought back (hopefully at a lower price) and returned to the broker.

puce Short Swing Profits

A term used in reference to profits realised by insiders from buying and selling a company's securities within a specified period.
See also Section 16.

puce Sinking Fund

An annual reserve of capital required by the creditor to be set aside to provide funds for retirement of an outstanding bond issue.

puce Soft Circle Commitments

Orally expressed declaration of intention by which investors indicate their intention to participate in an issue or some other project.
Considered as an agreement in principle subject to final agreement, satisfactory information etc.

puce Sole Proprietorship

A business operated by an individual directly, without the use of any legal entity.

puce Sophisticated Investor (USA)

An investor who is sophisticated and sufficiently knowledgeable with respect to financial matters and does not require the full protection of the securities laws.

puce Specific Identification

inventory cost accounting method used for goods not ordinarily interchangeable or those segregated for specific projects [IAS2.19].
Each inventory item is accounted for individually.

puce Spin-off

The creation of a new independent company from an existing company by the transfer of the assets of part of the company to a new corporation and the distribution of stock of that new corporation to stockholders of the old one.

puce Split or Stock Split

An increase in the number of outstanding shares of a company's stock so that the proportionate equity of each shareholder remains the same.
The market price per share theoretically should drop proportionately.
Usually the purpose is to make a stock with a very high per-share price more accessible to small investors.

puce Sponsor

The general partner who organizes and sells the limited partnership.

puce Spread

The difference between the current Bid and the current Ask of a given security.
Also, the difference between the exercise price of two options of the same class but different strike prices and /or expiry dates.

puce SRO

[Self-Regulatory Organization]
Non-government organization which has statutory responsibility to regulate its own members through the adoption and enforcement of rules of conduct for fair, ethical and efficient practices.

puce Stage of Development

Stage of development of a company, i.e. seed, start-up, or expansion.
Also used to define the degree of maturity of a fund.

puce Staggered Board of Directors

A board of directors divided into classes (typically three) elected for multiple year terms, with classes coming up for re-election on a staggered basis.
A staggered board may be used as a form of anti-take-over device.
See also Anti-Take-over Provisions, Blank Cheque Preferred Stock, Poison Pill and Shark Repellent.

puce Start-up

A company at its initial stages of development that has little or no earnings and revenues.
Start-up capital is usually provided for product development and/or initial marketing.

puce Stock Market

General term for the organized trading of stocks through exchanges and over-the-counter.

puce Stock Options, Incentive

See Incentive Stock Options.

puce Stock Power

A power of attorney enabling a person other than the owner to transfer stock ownership to another party.

puce Stock Purchase Agreement

A legally binding agreement detailing the sale of stocks, including price and terms.

puce Stockholder Agreement

An agreement among stockholders to ensure maintenance of stable ownership and management of a company for the life of the investment.
Venture capital investors will typically require a stockholder agreement which may cover, among other things, a right of first refusal; a right to participate in insider sales (ie sales by existing shareholders); an agreement to elect certain directors; and provisions as to buyout.

puce Stop Order (USA)

An order issued by the SEC suspending the order of effectiveness of a registration statement because of misstatements or other improper activities by an issuer or its underwriters.
Sales of new securities after issuance of the stop order will violate the Securities Act of 1933.

puce Street Broker

An over-the-counter broker, as opposed to an exchange member.

puce Street Name

Refers to securities beneficially owned by investors, but registered in the name of a nominee of a securities or brokerage firm, which are then allocated within that firm to the accounts of individual investors.
See also Cede & Co.

puce Strike Price

The point at which the exercise price of an option to buy a security equals the market price of that security.

puce Sub-chapter S Corporation (USA)

See S Corporation.

puce Subcontractor

An individual or company hired by a general or prime contractor to perform a specific task as part of the overall project.

puce Subordinated

Adjective to describe a security characterized by a relatively lower priority for repayment in case of liquidation.

puce Subordinated Debenture

A debenture subordinated to other obligations of the issuer.
A subordinated debenture may be subordinated to all other debt instruments.
In the USA it is frequently convertible into, or accompanied by warrants to purchase, common stock.

puce Subordinated Debt

Debt which has a lower priority for repayment than other debt, ie it may not be repaid until the senior debt has been repaid.

puce Subscription Privilege

The right of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of equity.

puce Sweet Equity

Shares granted by investors at attractive terms or even no cost to the founders or managers of a company.

puce Syndicate

The group of underwriters legally obligated to purchase securities in a firm commitment public offering.
Also, the department within the lead underwriter's firm that collects the subscriptions and holds the book.
See also Firm Commitment Underwriting.

puce Syndicate Book

See Book.

puce Syndicated Investments

Underwriters or broker/dealers who sell a security as a group.

puce Syndication

A group of venture capitalists jointly investing in an investee company.





 

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