Equity investment is money that is invested in a firm by its owner(s) or holder(s) of common stock (ordinary shares) but which is not returned in the normal course of the business. Investors recover it only when they sell their shareholdings to other investors, or when the assets of the firm are liquidated and proceeds distributed among them after satisfying the firm's obligations.
Equity Investment Instruments
1. Common Stock is where the investor holds some shares of the company and earns money as dividends, which is not a guarantee. The investor has minimal power in the decisions based on which class he belongs to. Voting power, dividend payments and rights to assets differ according to the class.
2. Buying Preferred Stock is a more stable equity investment with no power in decision-making. Dividends are regular and independent of the market. The dividends may be predetermined or floating.
3. Warrants are unique such that common stock is available at a specific price during a strip.
4. Equity line of credit is similar to bank line of credit. It is a commitment by the investor to purchase common stock over a period of time. The firm has the benefits of flexibility, control, security, speed and market timing. The major advantage to the investor is he pays a discounted rate for the stocks.
Checklist for Investors before making an equity investment
• Good record of accomplishment and expertise of the management.
• An impressive business plan that is detailed and accurate.
• Return on investment and the time duration.
• Details on the limited control after investing.
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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