Plekhanov Russian Economic Academy

Companies have issued three varieties of preferences shares from time to time, to confer special rights; these are redeemable preferences shares, participating preferences shares and convertible preferences shares. Redeemable preferences shares are similar to loan capital in that they are repayable but they lack the advantage enjoyed by loan interest of being able to charge dividend against profit for taxation purposes, participating preferences shares enjoy the right to further share in the profit beyond their fixed dividend, normally after the ordinary shareholders have received up to a state percentage on their capital, convertible preferences shares give the option to holders to convert their shares into ordinary shares at the specified price over a specified period of time.

3. The Stock Exchange and the Capital Market

The Capital Market embraces all the activities of financial institution engaged in:

. the raising of finance for private and public bodies whether situated in

UK or overseas (the primary market);

. trading the securities and other financial instruments created by the activity above (the secondary market).

The Stock Exchange plays a central role in this international market. It provides the primary facility fir marketing new issues of shares and other securities, and also a well-regulated secondary market in shares,

British government and local authority stocks, industrial and commercial loan stocks and many overseas stocks that are included in its Official

List. Nowadays it called the London Stock Exchange Ltd is an independent company with the Board of Directors drawn from the Exchange’s executive, and from the customer and user base.

The main participants on the Stock Exchange are Retail Service

Providers (RSPs) and the stockbrokers. The function of RSPs is to provide a market in securities, which they have nominated, and to maintain two-way prices, i.e. lower price at which they are prepared to buy and a higher price at which thy will sell. And stockbrokers can act for client as agent only, when purchasing or sell securities on their behalf, in which case they deal with RSPs. And dual capacity stockbrokers/dealers, however they will buy and sell shares on their own account, and may act as both agent and principal in carrying out clients ‘buy’ and ‘sell’ instruction.

Unfortunately the integration of the broking and dealing functions within the same financial grouping can give rise to conflict of interest, and this has made it essential to create a protective regulatory framework both within and between financial institutions.

But some companies are not suitable for a full Stock Exchange listing and the Alternative Investment Market (AIM), setting up by the

Stock Market Exchange in 1995, is a more suitable for unknown and risky companies.

Its main features are:

. no formal limit on company size;

. ?500.000 capitalization (full listing ?3-?5 million);

. no minimum trading record (full listing five years);

. 10% of the equity capital must be in public hands (full listing 25%). no entry fee is required, but a annual listing fee of ?2.500 in year 1, rising to ?4.000 in year three is payable.

4. Procedure for an Issue of Securities

All arrangements made by an Issuing House, which specialized in this work.

The procedure would be probably as follows: