The law outlines what financial tools are used to determine value, the duties directors have to ensure value and the legal rights that various parties, including shareholders, have in regard to securities and dividend payments.
Corporations can be financed through a variety of methods such as stock sales and bond transactions. Many of these transactions are tightly regulated. Examples of corporate finance are the funds that are used as capital contribution when the company is incorporated. This is facilitating the start of the business. Later in the operation of a company, the company can require additional capital in order to finance new operations or to keep the existing operations running. Companies have a wide range of options when it comes to financing.
Companies can either obtain a loan from a bank or allow new shareholders to provide equity finance and therefore to become owners of the company. If so, the company should set the terms straight. This means that the company should mention the ordinary shares with voting rights, the preference shares with limited voting rights and the tracking of the shares. Companies can also issue debt instruments such as bonds and can list the equity or debt instruments on a primary market.