In any economy, there is such a thing as emission. What is this procedure? What is emission in the context of state banking policy and the activities of enterprises? What are the laws governing the activities of issuers related to certain business entities in Russia?
Definition of the term
What is emission? Economists distinguish several of its varieties. There is an issue of money. What is this phenomenon? In this case, we are talking about the release of money supply by the state or banks into free market circulation. There are also issues of shares and bonds, that is, corporate securities. They are issued by subjects not directly related to state institutions. There are also interpretations of the term that are not related to the financial sector. For example, the phrase “emission class” refers to the field of chemistry. Now we will consider in detail the features of each type of issue - financial, of course, of a nature.
Money issue
First - the issue of money. We said above that either the state or banks can be generators of capital. In the first case, the issue is called budgetary, in the second - credit. What does this mean in terms of the practical actions of business entities? In the first case, we are talking about financial support of the budgetary needs of the state, in the second - the issuance of loans.
Money emission is also divided into primary and secondary. In the first case, we are talking about working with capital in non-cash form. Now, as a rule, these are electronic records protected on electronic bank accounts. In the second case, it means printing money.
In some cases, the issuer receives the so-called share premium, which is the difference between the value of the cash put into circulation and the costs associated with their production. As a rule, such a subject is the state or the Central Bank.
Who are the issuers?
How can government issue and its banking variety be implemented in practice? If we talk about modern mechanisms, then in the first case, the central bank becomes the institution playing a leading role. He can:
- initiate printing of banknotes;
- work with bank bills (those that are commercial);
- to acquire foreign currency;
In some cases, the executive branch, such as, for example, the treasury, may also be the subject of emission processes.
What rights, in turn, are vested in private financial institutions? How is the bank issued? As a rule, in most countries of the world there is the only possible mechanism in which this can happen - the issuance of loans.
Money issue in Russia
What is money emission in Russian practice? Consider the features of the relevant procedures. Cash emission, according to the norms of the legislation of the Russian Federation, can be carried out only by one financial institution - the Central Bank. A number of key principles have been established with regard to it. They are as follows:
- optional gold security (or using other precious metals);
- the rights vested in the Central Bank in terms of issuing money are monopolistic (no other organization can issue);
- unconditional and undeniable liquidity of banknotes (the ruble must be accepted for payment throughout the territory of the Russian Federation, and moreover, only it);
- unlimited interchangeability of banknotes and coins in the same set of denominations (no matter how to pay - one bill in 1000 rubles, or twenty banknotes of 50);
- strict legal regulation (decisions regarding the issue should be made through legal procedures at the level of the board of directors of the Central Bank).
It will also be useful to know what functions the Central Bank has in terms of issuing money. Experts call the following:
- management of the production of coins and banknotes, forecasting the needs of the economy regarding the amount of cash;
- work with reserve funds of cash;
- development of rules regarding custody and collection procedures for cash (primarily for commercial banks);
- establishment of degrees of protection for cash payments, development of procedures for replacing damaged banknotes and coins with new or similar ones at face value;
- regulation of operations related to cash.
Central banks of many other countries of the world have a fairly similar set of functions. And they work within the framework of principles similar to those adopted in Russian practice.
Issue of securities
Now let us consider in detail what is the issue of shares and other securities. Take, for example, the appropriate mechanisms that work in Russia. In the Russian Federation, the issue of bonds and shares is regulated by several Federal Laws - “On Joint-Stock Companies”, as well as the Law “On the Securities Market”. Also the most important source of law is the decree of the Central Bank on the standards for the issue of shares.
Subtleties of terminology
It is very important to understand the difference between such terms as the issue of securities, their issue and placement. This is not the same thing, despite the fact that these concepts are often used as synonyms. As such, the issue in this case should be understood as the totality of certain actions of the issuer carried out within the framework of the norms prescribed in the laws. In turn, the issue of securities is a certain set of shares or bonds that reflect the same volume of property rights and the same conditions in terms of trade.
By the placement of securities it is customary to understand the procedure for their alienation in favor of the new owner through official transactions. At the same time, the term "issue" as applied to stocks and bonds often combines all three definitions that we gave above.
Securities Issue Forms
What in practice are there forms of issue for securities? The main ones are as follows. Firstly, this is a non-public offering - among a closed group of investors. True, in this case, the number of shareholders, based on legislative standards, is limited to 100 people. Secondly, a public offering of shares may be carried out.
Securities issue stages
What mechanisms are used to issue securities (if we are talking about its public format)? If we read the corresponding Federal Laws, we will find there the following sequence of stages of this process:
- deciding that securities will be issued;
- implementation of registration procedures in accordance with the provisions of the law;
- production of share forms (if we are talking about issuing them in paper form);
- in fact, placement of securities;
- reporting procedures;
In some cases, it may be necessary to register the so-called issue prospectus, a documentary source that will reflect information about the company that issues securities and other information related to the issuer's work.
When emissions are needed
For what purpose does the enterprise use emissions? The main one is attracting additional investment capital through the sale of shares and bonds. Issue may also be carried out if the form of ownership of the enterprise is a joint-stock company, and it is necessary to distribute shares among owners or founders.Another option for using this financial instrument is to increase the authorized capital of a business company, which occurs due to the issue of new securities. This procedure is commonly referred to as an “additional share issue”. Sometimes all three mechanisms are used by the enterprise at the same time, especially when it comes to large-scale businesses.
Consider how the main types of issue of securities. That is, concerning the issue of shares and bonds.
What about the first type of securities? According to the norms of the relevant Federal Law, the issuer has the right to place shares belonging to the type of ordinary, as well as those that are called preferred. In the second case, the value of securities, according to the norms of the law, cannot be higher than 25% of the total authorized capital of the company.
The rules for placing bonds are somewhat more complicated. We will study them in more detail.
Issue and bonds
The placement of bonds is one of the ways to raise capital on the basis of the formation of debt obligations of the enterprise to the buyer. The procedure for issuing bonds is also regulated. The document necessary as part of its correct conduct is an official decision of the issuer. It should contain clauses reflecting:
- bond issue purpose;
- an indication of what kind of securities;
- total monetary value of the issue;
- total number of bonds;
- face value valuable papers;
- settlement procedure with bond buyers;
- terms of placement of securities.
Legislative regulation of emissions
Consider what the Russian legal acts have requirements related to the issue of securities by enterprises.
Among those that can be noted in the first place is the provision (set forth in Article 24 of the Federal Law) that the issuer has the right to issue shares on the market in an amount that should not exceed those values indicated in the constituent documents, as well as prospectuses (if any). At the same time, if the number of securities is less than in the corresponding sources, then this will not be a violation of the law.
That is, if, for example, a company needs an additional issue of shares, then their total number cannot be more than prescribed in the documents reflecting the announced amount of securities. Although, as noted by some lawyers, it is quite possible to make a decision at a meeting of shareholders, according to which the authorized capital can be increased by issuing additional securities, as the 28th article of the Federal Law "On Joint-Stock Companies" reads.
The period during which the issuer undertakes to complete the process of the placement of shares is one year from the moment of the start of the issue (unless otherwise specified in relevant sources of law).
It is impossible to issue securities earlier than two weeks after informing their potential buyers about the specifics of the issue.
As soon as the shares are issued, the company agrees to provide a report to the appropriate department on how all the procedures prescribed by law have been implemented. Consider the basic requirements for this document.
Issue report
The report containing information on the results of the issuer's work in the direction of issuing securities should contain the following information:
- start and end date of the issue;
- share price;
- total number of issued securities;
- money received on the account of the company from buyers of shares;
- if a currency has arrived, information reflecting its volume;
- if there were assets for payment of shares - information on their size.
The report is then sent to the registration authority and reviewed within two weeks. If there are no violations, then the document is registered. If there are complaints, then the agency may recognize the issue as unfair. What does it mean?
Unfair emission
The term "unfair emission" is enshrined in law.It refers to the actions of the issuer, which may result in incorrect compliance with the prescribed procedures for the issue of shares. They can be fixed both at the stage of registration of the issue and during the period when the submitted report on the issue of securities is considered.
What will happen in the first case? The office will simply refuse to register. In the second, it cancels the issue. A practical consequence of the detection of unscrupulous emissions will be the registration authority’s appeal to the structure of the Federal Securities Commission. At the same time, an option is possible in which the company will be able to eliminate the identified violations. Then the registration authority may permit the renewal of the issue.
Issue and liability of businesses
If the issue is called invalid due to dishonesty, the issuer agrees to return the funds to investors (buyers of securities). In turn, the shares are returned to the company. If the issuer refuses to comply with this requirement, the Federal Securities Commission may go to court. At the same time, the payment of possible costs during the hearing will be entrusted to the enterprise that issued the securities in an unfair manner. What emissions are from the point of view of business responsibility, we now know - this is not just a formality.
A scenario is also possible in which the issuer's obligations to securities buyers will be in monetary terms more than reflected in the prospectus. Such cases may arise as part of procedures such as additional share issues. Then the issuer is obliged to compensate all costs of the buyer of securities. If he does not, the Federal Securities Commission will also go to court, which is likely to decide to recover the debt from the enterprise.
