Financing Contingency

Common stock represents part ownership in an incorporated entity. A company’s common stock can be found under the “stockholders’ equity” section on the company’s balance sheet. Common stock is a US term, in the UK we would say “Share capital”.

A reduction in the ownership percentage of a shareholder due to the issuance of new shares in the company. As new shares are issued, the proportion of the company each shareholder owns decreases, potentially affecting their control, influence, and value of their investment.

Rights that give existing shareholders the opportunity to purchase new shares issued by a company before they are offered to new shareholders, allowing them to maintain their ownership percentage.