Equity

10b5-1 Plan A pre-arranged trading plan that allows insiders to sell shares automatically, bypassing insider-trading restrictions.

409A Valuation Independent appraisal of a private company's fair market value that legally establishes the strike price for option grants and determines tax treatment.

83(b) Election for Restricted Stock: How It Works The 83(b) election lets employees pay tax on restricted stock at grant date rather than vest date. Learn the 30-day filing window and when it saves money.

Accelerated Bookbuild A rapid institutional share placement that raises capital overnight without a full roadshow or prospectus.

Accelerated share repurchase An accelerated share repurchase (ASR) is a financial instrument that allows a company to buy back a large number of its shares immediately from an investment bank, with deferred payment or hedging.

Acceleration Clause A contractual provision that allows unvested equity to vest immediately upon a specific event, typically a merger, acquisition, or change of control.

Additional Paid-In Capital The equity account recording the amount shareholders paid above par value when shares were originally issued, also called premium or contributed capital in excess of par.

Adjustable Rate Preferred Stock Preferred shares whose dividend resets periodically based on market conditions, benchmark rates, or issuer adjustments, as opposed to fixed-coupon preferred.

ADR Arbitrage ADR arbitrage buys the cheaper of an ADR and its underlying ordinary shares and sells the dearer, capturing the spread. Mechanics, costs, and risks.

ADR Bid-Ask Spread and Liquidity for Small Accounts Thinly traded ADRs often have wide bid-ask spreads that disproportionately erode returns for small investors. Understand liquidity risks before buying a low-volume ADR.

ADR Cancellation The process of surrendering an American Depositary Receipt to the depositary bank to receive the underlying ordinary shares in their home country.

ADR Custody Fee Tax Deductibility ADR custody fees are investment expenses incurred on ADRs and may be tax deductible if held for income or in specific account structures.

ADR Delisting: What Investors Can Do Options available to investors when an ADR is delisted from a U.S. exchange, including converting to shares or selling over the counter.

ADR Dividend Payment Timing When are ADR dividends paid: the delay between a foreign company's dividend record date and U.S. ADR holder cash receipt, and why the gap exists.

ADR Dividend Reinvestment and Fractional Shares How DRIP programs work for American Depositary Receipts, why fractional shares arise from currency conversion, and how brokers settle remainders.

ADR Dividend Withholding Tax The foreign income tax withheld by a company's home country on dividends paid to ADR holders, and mechanisms for claiming credits or refunds.

ADR Foreign Tax Credit for US Investors US investors can claim a foreign tax credit for taxes withheld on ADR dividends, avoiding double taxation on international shares.

ADR Fungibility ADR fungibility is the two-way swap between an ADR and its foreign shares that keeps prices aligned. How issuance, cancellation, and limits work.

ADR Issuance Process of creating American Depositary Receipts from foreign shares, enabling US investors to trade foreign stocks.

ADR Premium and Discount to Underlying Shares ADRs trade above or below the implied value of their underlying shares due to fees, currency, and demand. What drives the gap and how arbitrage closes it.

ADR Program Termination How foreign companies and depositary banks wind down ADR programmes and what happens to holders.

ADR Ratio Change: Effect on Share Count and Price When a bank splits or consolidates the ADR ratio, the number of shares held changes inversely, and the price adjusts to keep total value constant.

ADR to Ordinary Share Conversion: Tax Consequences Tax consequences of converting an ADR to ordinary shares depend on whether the conversion is a taxable event, how cost basis transfers, and reporting obligations that arise.

ADR Trading Mechanics of buying and selling American Depositary Receipts on US stock exchanges.

ADR Treatment in a Merger or Acquisition What happens to ADR shares when the underlying foreign company is acquired—cash payouts, share exchanges, and notice requirements.

ADR Voting Rights How ADR holders exercise shareholder voting power on foreign company matters.

ADR vs ETF for Foreign Stock Exposure Compare ADRs and ETFs for international stock investing—weighing currency exposure, diversification, fees, and tax treatment to choose the right vehicle.

ADR vs GDR: Key Differences for Investors ADR vs GDR differences: American Depositary Receipts trade on US exchanges; Global Depositary Receipts trade worldwide. Compare currency, fees, and access.

ADR vs Ordinary Shares: Which to Buy Compare ADR vs ordinary shares: costs, taxes, liquidity, and access differences when investing in foreign stocks from the U.S.

Allotment Share Repurchase Systematic repurchase of shares allocated to employees or acquired gradually from the open market to reduce share count.

Alphabet Shares Share classes labeled A, B, C and beyond, enabling differential voting rights, dividend rates, and economic interests among shareholders.

Alternative Minimum Tax and ISOs How exercising incentive stock options can trigger an unexpected AMT liability even without selling shares.

American depositary receipt An American depositary receipt (ADR) is a security representing shares of a foreign company that trades in US markets, allowing US investors to own foreign stock without foreign trading accounts.

Annual General Meeting The required yearly assembly where public company shareholders vote on directors, auditors, executive compensation, and key resolutions.

Anti-Dilution Provision Contractual protection that adjusts a preferred shareholder's conversion price downward when new shares are issued at a lower price.

Anti-Dilution Provisions Contractual protections that adjust an investor's conversion price or share count downward if the company issues shares at a lower price, preserving the investor's ownership or economic value.

Appraisal Rights Exit valuation option in forced transactions; the legal right of dissenting shareholders to petition for court-determined fair value.

At-the-market offering An at-the-market offering (ATM) is a continuous program through which a public company sells shares into the open market at prevailing prices, raising capital gradually over time.

Auction Rate Preferred Preferred stock whose dividend rate resets periodically via a Dutch auction mechanism, allowing issuers to minimize cost while offering investors floating income.

Authorized but Unissued Shares Shares approved in a company charter but not yet issued, representing future dilution potential for existing shareholders.

Authorized Shares The maximum number of shares a company may issue under its corporate charter, set by shareholders and fixed until amended.

Beneficial Owner vs Registered Shareholder The difference between street-name ownership through a broker and direct registered ownership affects voting rights, dividends, and corporate notices.

Beneficial Ownership vs Legal Ownership The economic owner and the registered owner of shares often differ, creating legal and tax complications in modern shareholding.

Best-Efforts Offering An underwriting arrangement where the bank sells shares as a broker without guaranteeing proceeds or even minimum capital.

Blackout Period A restricted trading window when employees with material non-public information cannot buy or sell company securities.

Blank Check Preferred Authorized preferred shares whose terms—dividends, liquidation rights, conversion features—may be set by the board at issuance without shareholder approval.

Blank Check Preferred Stock and Shareholder Risk How blank check preferred stock lets boards dilute common shareholders without a vote—terms, voting rights, liquidation preferences.

Block Trade A privately negotiated sale of a large shareholding, typically executed by a broker outside the open market to avoid market impact.

Bonus Issue A corporate action in which a company issues new shares to existing shareholders free of charge, funded from retained earnings or reserves, proportional to their holdings.

Bonus Share Issuance Corporate action distributing additional shares to existing shareholders at no charge, funded by reserves or retained earnings.

Book Value Per Share The per-share equity claim calculated by dividing total shareholders' equity by the number of shares outstanding, used as a baseline valuation benchmark.

Book-Building Process IPO price discovery method where underwriters collect investor demand and set the offer price based on the order book's shape.

Books and Records Demand: A Shareholder's Right to Inspect Company Documents How shareholders exercise the statutory right to formally demand inspection of corporate books, ledgers, and communications, and when courts enforce the right.

Bought Deal Offering A bought deal offering is a securities offering where the underwriter commits to purchase the entire offering upfront, bearing all market and pricing risk.

Broad-Based Weighted Average An anti-dilution mechanism that reprices preferred shares to the weighted-average price of all dilutive securities issued in a subsequent round.

Broker Non-Votes and Their Effect on Shareholder Proposals How broker non-votes on shareholder proposals affect approval thresholds and why brokers can vote on routine matters but must abstain on contested resolutions.

Calculating Cost Basis for ADR Shares How to calculate cost basis for ADR shares includes purchase price, currency gains, depositary fees, and dividend reinvestment; critical for Form 8949 tax reporting.

Call Option (Equity) A corporate right that allows a company to repurchase shares from shareholders at a predetermined price, distinct from the options contract.

Call Spread Corporate Corporate bond or preferred stock with embedded call option, allowing issuer to redeem early.

Callable preferred stock Callable preferred stock is a class of preferred shares that the issuing company has the right to repurchase at a pre-set price (the call price) after a specified date.