What is the difference between options and equity?
Many people know about equity, but what is an option? An option is the right to purchase a security at a stated price within a specified period in a contract or document. So to let you know in detail the legal issues related to the difference between options and equity, the following will introduce the relevant content to you in detail, hoping to help you.
What is the difference between options and equity?
1. Equity refers to the ownership of shares and corresponding rights and interests in the company. An option is a period in the future that allows the purchase of equity in a company at a specified price (usually a price based on the current company valuation). Options only become equity after they are purchased.
2. The way of exercising equity is that the agreement stipulates that it is equity and enjoys various rights and interests that shareholders should have. The way of exercising options requires the purchase of equity with cash before enjoying the various rights and interests of the equity.
3. The exit mechanism of equity is the choice of whether to redeem or retain. The exit mechanism of options is whether to redeem, whether to exercise, and whether to retain. There is one more option than equity.
2. How to Dividend Equity
Equity refers to the rights and interests of stockholders corresponding to the proportion of the shares they own and the right to assume certain responsibilities. Shareholders enjoy different rights and distribution rights of company profits according to the size of the shares they hold.
Dividends refer to the income paid by a joint-stock company to a stockholder as a percentage of the share of the stock. Dividends are dividends that a joint-stock company distributes to its shareholders as the income due to each share of the investment, that is, the interest earned. Dividends are generally deposited in three forms, mainly cash dividends. Stock dividends and property dividends. There are four dates in the distribution, namely the dividend declaration date, the dividend removal date, the share registration date, and the dividend issuance date.
Dividends are dividends paid by a joint-stock company to investors every year according to a certain percentage of the share of the stock. Common shares are eligible for dividends, while preferred shares are generally not eligible for dividends. To enjoy dividends, the premise must be that the company can be profitable. Generally, there are two forms of cash dividends and stock division of labor.
There is a difference between dividends and dividends. In terms of quantity, the ratio of dividends is generally fixed, while dividends can be more or less according to the company’s profitability; in terms of time, dividends are issued at the beginning of the year or the end of the year, and can also be divided into multiple installments. Distribution and dividends are generally distributed at the beginning of the next year; in terms of sources, dividends are not necessarily issued from profits, but dividends must be issued from profits; in terms of objects, ordinary shares do not necessarily receive dividends, depending on the company’s situation, Preference shares generally come with guaranteed dividend income.
3. Whether the options can participate in the company’s dividends
can not. An option is the right to acquire a certain amount of stock at a specific price at a certain time in the future. In theory, only after the company goes public, can the corresponding shares be obtained at the exercise price, and then the corresponding stock dividends can be obtained.
The above is the relevant content of “What are the differences between options and equity?” compiled by the editor for everyone. Through the above content, we can know that equity represents shareholders, and options exist more with the mission of incentives.
