Equity

Canadian Depositary Receipt A receipt issued in Canada representing foreign shares and trading on the NEO Exchange, often with built-in currency hedging.

Capital Reduction A corporate action in which a company reduces its stated share capital, typically returning cash to shareholders or writing off accumulated losses.

Capital Return vs Dividend: Tax Differences for Shareholders Capital return vs dividend tax differences: returns reduce cost basis and defer tax; dividends are taxed immediately. Understanding the shareholder impact.

Capitalisation Issue The distribution of free bonus shares to existing shareholders, funded by converting reserves or retained earnings into share capital.

Carried Interest The fund-manager performance allocation taxed as capital gains rather than ordinary income.

Carve-Out IPO Partial flotation of a subsidiary or business unit in which the parent company retains a controlling stake and continued operational influence.

Cash Merger Transaction Acquiring company purchases target company entirely in cash instead of issuing equity.

Cashless Exercise A method of exercising stock options where an employee borrows funds or uses proceeds from a simultaneous stock sale to cover the exercise cost, without laying out cash upfront.

Chinese Depositary Receipt A security allowing overseas-listed Chinese companies to issue shares on mainland exchanges, raising capital denominated in yuan.

Class A vs Class B Shares: What Is the Difference Class A vs Class B shares differ in voting power and economic rights; the split varies by issuer. One class typically carries more votes per share. Check the charter to know which.

Class C Shares and No-Vote Stock Structures Class C shares and no-voting rights structures let founders retain control while raising public capital by issuing non-voting equity.

Class Voting Rights for Preferred Shareholders Separate-class voting rights held by preferred stockholders on charter amendments, dilutive issuances, and changes to seniority.

Clawback Provision An IPO underwriting clause that reallocates shares from the institutional tranche to retail investors if public demand exceeds expectations.

Clawback Provisions in Equity Compensation Understand clawback provisions in equity compensation: when employers reclaim vested awards, SEC Rule 10D-1 requirements, and private company triggers.

Clawback Provisions in Executive Compensation: What Shareholders Should Know How clawback provisions let companies recover executive bonuses after restatements, and their role in shareholder accountability and governance.

Cliff vesting Cliff vesting is a vesting schedule structure in which a large portion of equity becomes fully vested after a waiting period (typically one year), with remaining equity vesting gradually thereafter.

Cliff Vesting vs Graded Vesting for Equity Awards Understand cliff vesting vs graded vesting equity schedules: how they differ in retention impact, forfeiture risk, and incentive design.

Common stock Common stock is the standard form of equity ownership, conferring on the holder a proportional claim on profits, voting rights, and residual value in liquidation.

Compulsory Acquisition Threshold in Takeovers When a bidder owns 90% of shares in a takeover, it can force the remaining minority shareholders to sell at the same price.

Confidential IPO Filing Confidential IPO filing is an SEC practice allowing emerging growth companies to submit draft registration statements privately, deferring public disclosure until shortly before the IPO roadshow.

Constructive Sale Rule for Appreciated Stock The US tax rule treating certain hedging strategies on appreciated stock as a taxable sale, triggering gain recognition without disposition.

Contingent Share Offering Issuing shares conditional on the achievement of future milestones, such as revenue targets, product launches, or integration of an acquisition.

Convertible Note to Equity Conversion Mechanics Learn how convertible notes convert to equity: valuation cap and discount rate math, what triggers conversion, and how preferred share allocation works.

Convertible Offering An issuance of convertible bonds or preferred stock that give investors the right to exchange the security for common stock at a preset price.

Convertible preferred stock Convertible preferred stock is a hybrid security that combines features of preferred stock with the right to convert into common stock, typically offering fixed dividends with upside potential.

Cornerstone Investor An anchor institutional investor who commits to a fixed IPO allocation pre-listing, securing a preferential stake and a binding lock-up period.

Cost Basis Methods for Stock: FIFO, LIFO, and Specific Identification Cost basis methods for stock determine which shares are treated as sold during a partial position liquidation. FIFO, LIFO, and specific identification each produce different tax outcomes.

Creeping Acquisition Gradual accumulation of a company's shares through open-market purchases to build a controlling stake without triggering mandatory bid rules.

Cross-Listed Shares A single company's ordinary shares listed and trading simultaneously on multiple stock exchanges in different countries.

Cross-Listing Listing a company's shares simultaneously on multiple stock exchanges in different jurisdictions, expanding investor access and trading venues.

Cum-Dividend vs Ex-Dividend Shares The price and entitlement difference between buying shares before and after the record date—and what each buyer actually receives.

Cum-Dividend vs Ex-Dividend: What the Terms Mean Cum-dividend means the buyer receives the upcoming dividend; ex-dividend means they don't. We explain why the stock price drops on ex-date and what this means for sellers and buyers.

Cumulative preferred stock Cumulative preferred stock is a class of preferred shares that accrues all unpaid dividends, which must be paid in full (including arrears) before any dividends are paid to common shareholders.

Cumulative Voting for Minority Shareholders Cumulative voting allows minority shareholders to concentrate their votes to elect at least one board director, unlike straight voting where the majority wins every seat.

Cumulative Voting vs Straight Voting for Board Directors How cumulative voting enables minority shareholders to elect at least one director, while straight voting locks control to the majority.

Cumulative vs Non-Cumulative Preferred Dividends Cumulative preferred dividends accumulate as arrears if unpaid; non-cumulative dividends are forfeited. The difference determines recovery rights in financial distress.

Currency Risk in ADR Investing Currency risk in ADRs arises because the underlying share is priced in a foreign currency; exchange-rate moves affect returns even though the ADR trades in US dollars.

Custodian Bank in ADR Programs The financial institution in the issuing company's home market that physically holds or book-enters the ordinary shares underlying a depositary receipt program.

De-SPAC Transaction A business combination in which a private operating company merges with a special-purpose acquisition company (SPAC) to become a publicly traded company.

Debt-Equity Swap Converting outstanding debt obligations into equity shares, typically as a distress workout or restructuring.

Declaration Date The date on which a company's board of directors officially announces a dividend or other distribution to shareholders.

Deferred Shares Shares that rank behind ordinary shares for dividend payments and liquidation proceeds, commonly issued to restructure founder economics or incentivize buyouts.

Demerger A corporate action in which a company is split into two or more separate, independent entities, typically through a spin-off or similar transaction.

Depositary Bank The financial institution that issues and manages depositary receipts on behalf of foreign companies, handling the mechanics of share custody, dividend distribution, and investor servicing.

Depositary Ratio The ratio determining how many ordinary shares one ADR represents, set by the depositary bank and affecting settlement and pricing equivalence.

Depositary Receipt Fees The custody, issuance, and pass-through charges assessed by depositary banks on ADR holders.

Depositary Receipt Inclusion in Benchmark Indexes ADRs and GDRs are treated inconsistently across major stock indexes. Some count as separate eligible securities; others apply stricter dual-listing rules, liquidity thresholds, or exclude them entirely.

Depositary Share A form of depositary receipt issued in smaller denominations that represent fractional ownership of underlying foreign shares.

Direct Public Offering A method for a company to raise capital by selling shares directly to the public without underwriter intermediaries, reducing costs but limiting access to retail investors.

Direct Registration Offering Shares registered directly in a shareholder's name without physical certificates, enabling seamless trading and settlement.

Directed Share Program A reserved allotment of IPO shares offered to employees, customers, or other stakeholders at the public offering price.

Director Fiduciary Duty The legal and ethical obligations of corporate board members to act in the best interest of the company and all shareholders.

Disqualifying Disposition An ISO sale that fails the holding-period test, converting the spread into ordinary income rather than capital gains.

Dissenter Rights Statutory protection allowing shareholders opposing a merger to demand judicial valuation of their shares at fair value.

Dividend A dividend is a payment from a company to its shareholders, usually taken from profits. It may be cash or additional shares, distributed quarterly or annually, and is the second main source of stock returns alongside capital gains.

Dividend In Specie Distribution of non-cash assets—such as subsidiary shares—directly to shareholders instead of cash or stock.

Dividend Recapitalization in a Leveraged Buyout A dividend recapitalization in a leveraged buyout loads a portfolio company with new debt to pay sponsors a dividend before exit, extracting value early. It increases creditor risk and limits the company's financial flexibility.

Dividend Reinvestment Offering A plan allowing shareholders to automatically reinvest cash dividends into newly issued shares, often at a discount to market price.

Dividend Reinvestment Plan A program allowing shareholders to automatically reinvest dividend payments in additional shares of the company, often at a discount.

Dividend Stripping A market practice where investors sell shares immediately before the ex-dividend date to harvest tax benefits while capturing dividend income elsewhere.