State Registration of Securities
Shares are an investment vehicle of companies. Whenever they open a joint-stock company, the founders issue securities for anyone to by. Money is transferring to the company becoming a means for its further development, while shareholders get their warranties. Subsequently, they may count on dividends (a profit share) or surplus assets, in case the company closes down.
The question is who will ensure the shareholder’s having the dividends or compensation after the liquidation of the company?
The answer is simple: the state. Or rather, the Central Bank. The point is that even before selling its securities (and before any operations at all), the company is obliged to pass the State Registration of securities. It is the Registration that makes shares into securities.
The Procedure for Securities Registration
The procedure and rules for the registration of securities (shares, bonds) are enshrined in local legislation.
The emitent (ie the company issuing securities) is obliged to register its shares within a month after the legal entity establishment. Otherwise, the joint-stock company may be closed down.
To accomplish that:
- A meeting is to be held in the joint-stock company to decide on issuing securities. This decision should be confirmed documentarily.
- The emitent submits documents for registration of the shares to the regulating authority.
- Immediately after the registration, securities are placed, that is, they pass to the shareholders.
- The emitent submits documents for the registration of the account of the results. This must be performed within 30 days after the emission closure.
If the regulator withholds the registration of the report, the shares are cancelled. Successful registration of the report means that the emission was legal, and the shares have value. The emission results are published in open media. Each flotation gets a unique number.
Placement of Shares: Format and Methods
Depending on the business legal structure and purposes of the emission, the joint-stock company may place shares by public or privet subscription. Under a privet subscription, securities are passed to a limited scope of persons while under the public one there are no such restrictions. The method of placement also depends on this point.
Under a private subscription, securities are passed over-the-counter and re-registered without a broker. Shares that are available to the general public can be sold and purchased on the stock exchange. These shares are of a prime interest to investors. Public placements were conducted and are additionally conducted by such world’s key companies as Apple and Google, Volkswagen and Renault, HP and Starbucks.