Glossary of financial terms

(see Buyout)

An individual usually employed by a brokerage firm or investment bank, who evaluates specific companies and industry trends for the purpose of advising investors to buy or sell stock or related financial instruments. The quality and reputation of an investment bank's analyst will often be a key component in selecting an underwriter since analyst coverage of a company after initial public offering helps to generate interest in the company's securities.

(see Business Angel)

Required by law, this report is prepared by the company and must be distributed to all registered shareholders and to those unregistered shareholders who request it. It includes information about management, operations, facilities, corporate vision, and an audited financial statement.

A meeting, which is required by law. A company must hold an annual meeting open to all its shareholders. The shareholders must receive ample notice of this meeting and the issues that will be resolved by a vote of the shareholders. The notification of the meeting is usually sent with the Annual Shareholder Report. Common issues resolved at shareholder meetings include the election of Directors, compensation of corporate officers, and issues related to the company's corporate vision. Each shareholder has normally the right to vote according to the shares owned. Usually, this means that the insiders holding the control block of stock make corporate policy.

It is an option or a convertible security (such as convertible preferred stock, which is the typical form of venture capital or mezzanine investment) which protect the holder's investment from dilution as the result of later issues of stock at lower price than the investor paid by adjusting the option price or conversion price or conversion ration.

Anti-dilution provisions that apply the lowest sale price for any shares of common stock (or equivalents) sold by the company after the issuing of an option or convertible security as being the adjusted option price or conversions ratio for existing shareholders. As an example, if a prior round of financing raised capital at € 2.00 per share with investors receiving full ratchet anti-dilution protection, and a subsequent round of financing was consummated at € 1.00 per share, the early round of investors would have the right to convert their shares at the € 1.00 price.

Anti-dilution provisions that apply a weighted average formula to the option price or conversion ratio of an early -round investor, based on the sales price and number of common equivalent shares sold by the company after the issuing of the option or convertible security. As an example, if a first round of financing raised € 1 million capital at € 2.00 per share and the first round investors received weighted average anti-dilution protection, and a second round of financing was consummated for an other 1 € million at 1 € per share, then the first round of investors would have the right to convert their shares at a weighted average adjusted price of € 1,50 per share.

A committee of the Board of Directors consisting of independent directors, responsible for selecting and overseeing the work of outside auditors and other audit activities.

The number of shares that the shareholders have agreed will be the maximum number of shares the company can issue without further agreement.