A security is any type of security or document that guarantees transferable
financial rights to the owner of the object or its benefit.
Securities are defined as:
Securities are a tradable and exchangeable financial instrument that has a
financial value.
The company that issues securities is called the “issuer”. The legal structure
of states determines the eligibility of securities.
Securities can be issued as a certificate, or generally without a certificate
and are only recorded in an electronic entry.
Certificates can be in bearer form, meaning that the holder owns the rights to
the security, or in name, in which case only the person in whose name the
securities are held is the rights holder.
types of stock
Its securities are divided into different classes:
1 - common stock
- Ordinary shares are a type of financial asset that represents the ownership of a company.
- The characteristics of common stock include the right of ownership, limited liability of the shareholders, the right to vote and control the company, and the right to buy new shares.
2- Preferred Stock
Preferred stock is a type of security in which the holder has a limited or
limited right or claim to the company's income and assets.
This type of stock is called premium for two reasons:
Dividends on these shares are paid before the common stock.
At the time of liquidation of the company or sale of assets, after the debts
of the company are settled, the preferred shareholders receive their salaries
first and then the rest of the assets go to the common shareholders.
Preferred shares are also called compound securities because they have the
characteristics of common stocks and bonds.
Preferred shares are similar to common stock in that they have no vesting date
in addition to tax costs; However, because they receive fixed interest, like
bonds, they fall into the fixed income group of securities.
The characteristics of the preferred stock are as follows:
Preferred stock for owners includes a kind of ownership in the company.
Preferred stock has no maturity date.
The issuing company is not required to mortgage or mortgage its assets on
these securities, because preferred shareholders have equity.
Dividends are paid to holders of these shares.
The payment of dividends requires the company to make a profit.
Preferential shareholders have a pre-emptive right over ordinary shareholders
in terms of receiving dividends.
Preferred shares are usually non-voting. This means that the holders of these
shares do not have the right to vote on the election of the board of directors
or other matters relating to the management of the company and they cannot
interfere in the decisions of the company.
3 - Right of stock priority
Ordinary shareholders, in addition to receiving dividends and voting rights,
have another right they call the preemptive right to buy shares.
It is usually stated in the Articles of Association of Civil Law-Based
Companies that if new shares are issued for sale, existing shareholders will
have priority in purchasing them.
This right allows all shareholders of the company who have the right to vote
or claim the company's reserves to acquire and subscribe for shares.
The issued shares are offered before they are offered to the public to the
company’s shareholders
Since the company's shareholders also want to preserve their rights and
position in the company, they expect to have priority over other buyers when
raising capital and issuing new shares by the company.
They have the right to exercise or assign this right. But since the bid price
of the company's shares is usually lower than the stock market price (the IPO
price is usually set about 15-20% below the market price at the time of the
announcement of the preemptive right), shareholders use this right
proactively.
Pre-emptive rights arising from an increase in the capital of companies, such
as shares, can be traded on the stock exchange.
If the shareholder is not interested in acquiring a new share, he can go to
the broker and sell the certificate of preemptive right based on the current
market price.
Short-term priority rights. In the event that the shareholders do not
subscribe or cancel the sale of the priority right certificate within the
announced deadline, the company will offer the certificates for sale on the
stock exchange after the end of the subscription period and the sale amount
after deducting the face value value and pays the related costs to the
shareholder’s account.
According to custom or regulations, shareholders are entitled to equal shares.
4 - Bonus share
- When a company has abundant free reserves, it may utilize a portion of its reserves by issuing bonus shares, in the name of its existing shareholders and in proportion to the shares they own.
- Company managers can do this by transferring a portion of the company's reserves account to a capital and bookkeeping account.
- After bonus shares are issued, the share price of the company usually decreases depending on the number of bonus shares issued in the market, but since the earnings per share does not change, the shareholder of the company, whose number of shares has now increased, after a while, the recovery of the share price makes the desired profit.
5- Participation papers
Securities bearing a name or anonymity in accordance with the law on the
issuance of participation bonds with the permission of a special law or a
license from the Central Bank, to provide part of the financial resources
necessary to establish, complete and develop profitable production,
construction and service plans including financial resources Purchase of raw
materials required for production units by Government, government companies,
municipalities, organizations, non-governmental public institutions,
subsidiaries of the above-mentioned agencies, public and private joint stock
companies and cooperative companies. It will be delivered through a public
offering.
6 - Option Contract
- Derivatives are a type of security whose value is determined by another underlying asset. Derivatives in financial markets come in many forms.
- One type of derivative is an option contract.
- In general, option contracts fall into two categories: call options and put options.
- Option contract: It is a contract in which the buyer has the option to buy a certain amount of financial assets or securities on the date and for the amount specified at the time of the contract and the seller undertakes to sell the assets or securities on demand. Buyer sells.
- Put option contract: It is a contract in which the seller has the option to sell a certain amount of financial assets or securities on the date and for the amount specified at the time of the contract, and the buyer undertakes to sell the assets or bonds in a question if you are asking the seller to buy.
7 - forward contract
They are considered as derivative instruments. In a forward contract, both
parties to the transaction undertake to trade a financial asset at a
specified price at a specified time. specified at the time of the contract.
Futures contracts often do not result in physical delivery of goods or
financial assets and are pre-settled by the parties to the contract.
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