Understanding Business Funding Sources and Shareholder Rights

**Funding Sources**

Financial sources are categorized as follows:

According to Ownership of Resources

• **Own Financing:** Capital contributed by partners or owners, and reserves.
• **External Financing:** Resources that generate a debt or obligation.

According to the Length of Time

• **Long-Term:** Members' contributions, loans, and borrowings.
• **Short-Term:** Bank loans and other short-term loans.

According to the Origin of Funds

• **Internal Financing (Self-Financing):** Generated within the company through savings.
• **External Financing:** Funds sourced from outside the company.

**Shareholder Rights**

• Participate in the sharing of benefits in proportion to the number of shares held.
• Subscribe to shares in capital expansions on a preferential basis.
• Be informed about the management of the company and vote at general meetings.
• Participate in the net assets resulting from liquidation.

Shares are securities into which social capital is divided, representing aliquots of the capital.

**Share Values**

• **Nominal Value (NV):** The value given to the title at the time of issuance. NV = Social Capital / Number of Shares
• **Theoretical Value (TV):** Given by the ratio of net worth and the number of existing shares. TV = Net Worth / Number of Shares
• **Market Value:** The price paid for the share on the stock market. This value need not coincide with the NV or TV since it is a function of the law of supply and demand.

Capital Value: The value of a business in the market is determined by the market value of all its shares.

**Preemptive Rights**

Preemptive rights seek to compensate for the loss of share value as a result of an increase in capital. Their economic value should be equivalent to that loss.

**Self-Financing**

Self-financing is a form of financing using resources generated within the company, including retained earnings as reserves and allowances for depreciation and provisions for risks. There are two types:

Self-Financing for Growth

• **Legal Reserves:** These are incorporated compulsorily by law in corporations, with a minimum of 10% of the profits until the reserve reaches 20% of the capital.
• **Statutory Reserves:** These are set out in the statutes of the company.
• **Voluntary Reserves:** These are set up by the voluntary agreement of the partners.

Self-Financing for Maintenance

This type of self-financing aims to keep the company's productive capacity intact.

• **Depreciation:** Reflected as a cost, it represents the portion of the total value of goods that has been consumed over a period.
• **Provisions:** Reserve funds to cover risks or possible future losses, allocated before calculating benefits. These risks may arise from compensation disputes or other likely future events.