Shareholders Rights, Types of Shares, and Investment Funds

Major Shareholders' Rights

• Right to Receive Dividends: Shareholders have the right to receive dividends declared by the company.
• Right to Participate in Net Assets: In the event of company liquidation, shareholders have the right to participate in the distribution of net assets.
• Preemptive Rights: Shareholders have preemptive rights in capital increases, allowing them to purchase new shares before they are offered to the public. These rights are often negotiable.
• Voting Rights: Shareholders have the right to vote in general shareholder meetings. Each share typically allows one vote, although there may be shares that do not grant voting rights in exchange for economic benefits.
• Right to Information: Shareholders have the right to access information about the company.
• Right to Challenge Corporate Actions: Shareholders have the right to challenge corporate actions they believe are detrimental to their interests.

Classes of Shares

• Common Shares: These shares give the holder the standard rights of a shareholder.
• Preferred Shares: These shares usually offer higher dividends or a larger share in the event of company liquidation.
• Non-Voting Shares: Holders of these shares forfeit their voting rights in exchange for a fixed minimum annual dividend, in addition to the dividend generally given to all shares.
• Redeemable Shares: These shares can be redeemed (repurchased) at the request of the company, the shareholder, or both, allowing the shareholder to recoup their investment.

Shares and Capital Increases

• Fully Paid Shares: Owners of existing shares receive new shares for free, proportionate to their existing holdings. Shareholders can sell their subscription rights if they do not wish to acquire the new shares. The new shares are paid from the company's reserves.
• Partially Paid Shares: In capital increases, the issuer may require only a fraction of the nominal value to be disbursed, with the remainder coming from reserves.
• Shares at Par: For each new share, an amount equal to its nominal value is paid.
• Shares with a Premium: The issuing company requests an amount greater than the nominal value. The additional amount raised is recorded as a share premium.

Types of Mutual Funds

• Bond Funds: Primarily comprised of fixed-income securities (public or private), repos, and cash positions.
• Mixed Bond Funds: Invest mostly in fixed-income securities, with a small percentage in stocks.
• Equity Funds: Have a high percentage of stocks and a portion of their portfolio in fixed income.

Collective Investment Schemes (CIS)

Collective Investment Schemes (CIS) aim to raise money, property, or rights from the public to manage or invest in assets, rights, securities, or other instruments (financial or otherwise). The investor's return is determined by the collective results. CIS pool funds from a large number of people.

Investment Committees and Fees

• Subscription Fee: A fee for purchasing shares (not all funds apply this).
• Management Fee: A fee for managing the fund (always applies).
• Custodian Fee: A fee for the care and custody of the shares (almost always applies).
• Redemption Fee: A fee charged when selling shares or requesting the invested money back (always applies).

Fund Returns

The return on a fund is determined by the difference between the purchase price and the selling price. Funds do not pay dividends; instead, profits accumulate within the fund, increasing the value of each share.