Shares can be transferred to an investor in three ways: when a company is formed, in a directed share issue or when purchasing them from founder shareholders. The most typical method is a directed share issue in which the company offers new shares to investors and the invested amount is recognised in the company’s equity and the money becomes available for the company’s use.
Aikaisen vaiheen sijoituksissa sijoittaja saattaa olla mukana yhtiön perustamisessa, jolloin sijoitus kirjataan tarvittavin osin osakepääomaan ja loput sijoitetun vapaan oman pääoman rahastoon.
Purchases from shareholders are less common, as in that case the money is transferred to the shareholder(s), from whom the shares have been purchased, in person. The model may, however, be used in situations where there is a desire to change the ownership structure of founder shareholders.
Occasionally, share arrangements (and also option arrangements) may include different series of shares, which in their basic form are “ordinary shares” and “preference shares” as well as related conversion rights. A convertible (right to convert to an ordinary share) share usually provides an investor with the best protection against failure. This is because a preferential right can be linked to the structure, either through redemption, repayment or a liquidation preference clause. Conversion options may, in a worst-case scenario, alter a company’s ownership structure in the follow way:
The conversion price can be determined either in advance as fixed or as based on certain terms, and the conversion may be automatic and/or voluntary.