A/S Increases Valid Reasons
- Besides the ugly "Dilution" we all hate, theres also good reasons a company would increase it's A/S.
Quote:
Authorized Shares Increase Possible Reasons:
The first reaction of many is the hated DILUTION scare.
But the Board of Directors may have other valid reasons to increase the Authorized number:
1.To use as collateral for capital financing, lines of credit &/or loan programs
2.To reserve shares for options/warrants.
3.To raise capital for expansion.
4.To expand the product line through acquisitions.
5.To establish strategic relationships with other companies. (Dealers & Distributors)
6.To provide equity incentives to directors, officers, employees, consultants.
7.To create an employee stock ownership plan.
8.To protect the company from hostile takeover.
9.To use as a means of establishing subsidiaries based upon patents
10.To provide as restricted's for partners in JV programs.
11.To use for Cross-Listing shares on a foreign stock exchange that can lead to increased stock liquidity and a decrease in a cost of capital.
12.The most hated is used to scam investors in diluting for no other purpose than to fill the ceo's or insiders pockets
(posted by maxshocker)
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