Debenture A debt instrument; basically the same as a promissory note.
Debt Any obligation by one person to pay another. May be a primary (direct) obligation as in a note, or a secondary (contingent) obligation as in a guaranty. Debt Instrument Any instrument evidencing the obligation of the maker to pay the holder of the debt instrument. Includes bonds, debentures and notes of all kinds. Dilution A reduction in the percentage ownership of a given shareholder in a company caused by the issuance of new shares. Director A person elected by shareholders to serve on the board of directors. The directors appoint the president, vice president and all other operating officers, and decide when dividends should be paid (among other matters).
Disclosure Document A booklet outlining the risk factors associated with an investment.
Diversification The process of spreading investments among various types of securities and various companies in different fields. Dividend The payments designated by the board of directors to be distributed pro rata among the shares outstanding. On preferred shares, it is generally a fixed amount. On common shares, the dividend varies with the fortune of the company and the amount of cash on hand, and may be omitted if business is poor or if the directors determine to withhold earnings to invest in capital expenditures or research and development. Drag-Along Rights A majority shareholders’ right, obligating shareholders whose shares are bound into the shareholders’ agreement to sell their shares into an offer the majority wishes to execute. Due Diligence A process undertaken by potential investors – individuals or institutions – to analyze and assess the desirability, value and potential of an investment opportunity.
110 A Practical Guide to Angel Investing
Powered by FlippingBook