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Complex Capital Structure

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Complex Capital Structure
A company's capital structure that consists of anything other than (or in addition to) stock and bonds. Capital structure consists of, in brief, the vehicles by which a company raises capital in order to maintain or expand operations. A complex capital structure may consist of convertible stock, warrants, rights, or convertible bonds, among other vehicles. A company may also have a complex capital structure if it divides its common stock into more than one class.

complex capital structure
A corporate capital structure that contains securities other than straight debt and stock. Thus, a firm that has securities outstanding such as convertible bonds, convertible preferred stocks, options, rights, or warrants is said to have a complex capital structure. Potential dilution of earnings resulting from a complex capital structure occurs in firms that report earnings per share on a primary and a fully diluted basis.


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A C corporation may be the appropriate entity in situations involving a complex capital structure designed to provide investors with a specified rate of return.
Covering those aspects of accounting and auditing unique to investment companies, the guide provides new guidance on accounting for offering costs, amortization of premium or discount bonds, liabilities for excess expense plans, reporting complex capital structures, payments by affiliates, financial statement presentation and disclosures for investment companies and nonpublic investment partnerships.
On the simplest level, private companies are also subject to the risk that complex capital structures and different classes of ownership will uncover differing interests among shareholders -- and the likelihood that a group of disgruntled shareholders will challenge a transaction.
 
 
 
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