| C |
| M&A Term | Definition | Note |
| C Corporation | refers to the default tax treatment of a corporation as an entity separate from its owner and taxed on its own income. Such entities include those organized as a federal or state law corporation, an association, or other business entity that is taxable as a corporation under the US Internal Revenue Code, but does not include any entity that has elected S Corporation status. Foreign “corporations” and limited liability companies are generally treated as C Corporations for US tax purposes, though some may elect to be treated as Partnerships or disregarded entities. | N1 |
| C in C | acronym for Change in Control | N1 |
| C of C | acronym for Change of Control | N1 |
| C Reorg | a stock-for-assets Acquisition treated as a Tax-Free Reorg under Section 368(a)(1)(C) of the US Internal Revenue Code. A C Reorg involves a corporation (or its 80 percent Parent) acquiring Substantially All of the Target corporation’s assets, in exchange for the acquiring or Parent corporation’s voting Stock and no, or a limited amount of, taxable consideration (referred to as Boot). | N1 |
| CA | Confidentiality Agreement. | N2 |
| Cabinet (UAE) | Federal Council of Ministers of the United Arab Emirates | N1 |
| CAC 40 | index of the 40 most significant values among the 100 highest market caps listed on NYSE Euronext in Paris. CAC 40 is one of the main national indices of the pan-European stock exchange group Euronext. | N1 |
| CAC 40 index | Paris-based stock market index of the leading 40 French shares. | N6 |
| CAGR | acronym for compound annual growth rate; often a measure used in the Business Plan | N1 |
| Calcs | shorthand for various calculations that are required on an M&A deal | N1 |
| Call | shorthand for Call Option | N1 |
| Call | Requirement for an investor to make additional payments on specified dates in order for an investment (e.g. a partly paid stock or an optional ownership) to be fully paid up. | N6 |
| Call Option | one party’s contractual right, but not obligation, to call for the delivery of particular asset (i.e., Shares) at a particular future point in time or within a particular time period at a Strike Price. Call Options often have an expiration period and are often used in public M&A as a tool to acquire an initial interest in the underlying Shares. | N1 |
| Call Option | Option conferring the right (but not the obligation) to buy securities (Underlying) or non-certificated shares in a company at an agreed price (Strike Price ) within a certain period (American call option) or on a specific date (European call option). The call option may be structured in personam (i.e. under the law of obligations) or in rem (based on a property right). In the case of a call option under the law of obligations, exercise of the option merely gives rise to a claim to receive a transfer of the securities. In a call option based on a property right, the purchaser can bring about transfer of title by means of a unilateral declaration of intent, without further involvement of the seller being required. The opposite of a call option is a Put Option. | N2 |
| Call Option | Option which gives the purchaser the right, but not the obligation, to buy an asset at a specified price either on an agreed date (European option) or on or before an agreed date (American option). This date is known as the expiration date. (See also put option.) | N6 |
| Callable Bond | Bond which can be redeemed before maturity at the option of the issuer. | N6 |
| Cancellation Scheme | a Scheme of Arrangement used to effect a P2P public Takeover by cancelling all existing Shares upon payment of consideration to the Target Company shareholders and the issuance of new Shares to the Bidco | N1 |
| Cap | often used as a shorthand for a dollar limitation in financial definitions, Covenants, Negative Covenants, Representations and Warranties and Indemnification provisions (e.g. “a cap on the amount of Indemnifiable Damages”). Cap is also used as shorthand for a limit on the amount of cash or Stock consideration offered in an Acquisition where the consideration is a mixture of cash and Stock. | N1 |
| Cap | Especially with regard to warranty claims, the parties may agree a maximum amount, i.e. a cap. The term is also sometimes used in the sense of an interest rate cap, i.e. an upper limit for a variable interest rate agreed in the context of financing. | N2 |
| Cap | Interest rate contract where the purchaser receives from the seller, at the end of each period prior to expiry of the contract, the difference between current interest rates and a strike interest rate, should interest rates rise above the strike. For example, agreement to receive money for each month during which LIBOR exceeds 5%. (See also floor.) | N6 |
| Capacity Opinion | Formal statement regarding the legal capacity of a contracting party and the power of representation held by specific persons acting on the party’s behalf. | N2 |
| Capex | shorthand for Capital Expenditures | N1 |
| Capex | Capital Expenditure. | N2 |
| Capital Adequacy | Firms conducting investment business are required to have sufficient funds of their own. The European Union Capital Adequacy Directive, which sets minimum levels of capital for UK financial service companies, came into effect on 1 January 1996. | N6 |
| Capital asset pricing model (CAPM) | A mathematical model showing an “appropriate” price, based on relative risk combined with the return on risk-free assets. It is an approximation of the cost of equity (CoE). An investor will require a return that is higher than the return on a risk-free investment. He will therefore require a premium to compensate for the general risk of his investment, plus a premium for other specific risks associated with the investment. The formula is as follows: CoE = RF + Beta x MRP + Alpha | N3 |
| Capital Asset Pricing Model (CAPM) | a single factor asset pricing model that measures the expected return for a security (or portfolio of securities) as the sum of a Risk-Free Rate plus a risk premium. The risk premium is equal to the Systematic Risk (measured by Beta) of the security (or portfolio of securities) multiplied by the risk premium of holding the overall market portfolio. The CAPM is often modified or extended for other risk factors, such as size, country risk, and Company- Specific Risk. See also Build-up Model. | N7 |
| Capital Asset Pricing Model (CAPM) | Economic model for valuing assets. The simplest version states that the expected excess return of a security over a risk-free asset will be exactly in proportion to its beta. | N6 |
| Capital Call | a demand by a Private Equity Fund from Investors for payment of all or a portion of unfunded capital commitments. Capital Calls are generally made at the time of the financing of an Acquisition, or to cover other costs. Capital Calls are usually made by issuance of a Draw-Down Notice. | N1 |
| Capital Duty | a tax charged in certain jurisdictions upon the issue of Share Capital or other Securities. See also Franchise Tax and Stamp Duty | N1 |
| Capital Expenditure (Capex) | Investment expenses; investment spending. | N2 |
| Capital Expenditures | expenditures by a party for investments in fixed assets. Such expenditures are capitalized to the Balance Sheet of the party under applicable accounting rules and then amortized as an Income Statement expense over a period of more than one year, rather than being immediately expensed to the Income Statement in full in the current period. A Capital Expenditure is distinguished from a current expense because the asset has a long-term impact that will benefit the business in future years as well as the current year. In the context of business valuations the Free Cash Flow, which is material to the Enterprise Value, is determined by subtracting the Capital Expenditures from the cash flow. | N1 |
| Capital Flight | See flight to quality. | N6 |
| Capital Gains Tax | a tax on the profit which is applied in various jurisdictions on a realized asset (i.e., Shares). See also acronym CGT. Transaction structures are often considered in the context of CGT liability. 1. (HKG) usage of the term generally refers to the same concept but Hong Kong itself does not levy Capital Gains Tax |
N1 |
| Capital Gains Tax (CGT) | Capital Gains Tax is a tax on the profit when selling (or ‘disposing of ’) something (an ‘asset’) that has increased in value, e.g. shares. It’s the gain made that is taxed, not the amount of money received. | N5 |
| Capital Gains Tax (CGT) | Tax levied upon the sale of an asset, based on the increase in its price since purchase. Tax-approved UK pension funds are exempt from CGT. | N6 |
| Capital Growth | Appreciation in the capital or market value of an investment, as opposed to income (e.g. dividends) which may be received from the investment from time to time. | N6 |
| Capital Market | Any financial market upon which securities are traded. | N6 |
| Capital Markets | a broad term that refers to the market for raising money through Securities offerings | N1 |
| Capital Stock | a generic name for Stock of any Class or series of a corporation | N1 |
| Capital Structure | a term referring to the overall structure of a company’s outstanding debt and equity. A company’s Capital Structure is generally divided into several distinct constituencies, such as senior debt, subordinated debt and equity (common or preferred). Note the structure may look very different pre- and post- Acquisition in a Leveraged Buyout. | N1 |
| Capital Structure | the composition of the Invested Capital of a business, including debt and debt equivalents, hybrid securities, non-equity claims, and equity. See also Simple Capital Structure and Complex Capital Structure. | N7 |
| Capitalisation Issue | See bonus issue. | N6 |
| Capitalisation-weighted Index | Index where the weightings applied to each component security are based on their relative market capitalisations. (See also equal-weighted index.) | N6 |
| Capitalization | Term used to describe a company’s permanent capital, long-term debt and equity. | N3 |
| Capitalization of Earnings Method | a form of the Capitalization of Economic Income Method. | N7 |
| Capitalization of Economic Income Method | a method within the Income Approach whereby expected Economic Income for a representative single period is converted to value through division by a Capitalization Rate. Also known as the capitalization method or direct capitalization method. | N7 |
| Capitalization Rate | a divisor (usually expressed as a percentage) used to convert into value the expected Economic Income of a normalized single period. The Capitalization Rate is generally calculated as a Discount Rate less a long-term growth rate. | N7 |
| Capitalization ratio | Measurement of the company’s debt component of the company’s capitalization. Measures the extent of debt used in relation to the company’s permanent capital. Determined by dividing longterm debt by long-term debt plus equity | N3 |
| CAPM | See capital asset pricing model. | N6 |
| CAPM/Capital Asset Pricing Model | the model for approximating the CoE, which is based on the assumption that an investor will require a return that is at least equal to the return on a risk-free investment, plus an adjusted premium to compensate for the risk that investments are made in equity and a premium for other specific risks associated with the investment. The formula is as follows: CoE = RF + Beta x MRP + Alpha | N4 |
| Capped | when used in the context of either a Cash Election or Stock Election transaction, Capped means that one or both forms of consideration are limited in amount. The fact that one or both forms of consideration are Capped requires that the Acquisition Agreement deal with allocation of consideration if the Capped form of consideration election is Oversubscribed. The two most common allocation structures are to allocate an Oversubscribed type of consideration on either a pro rata or a per capita basis. See Per Capita Acceptance and Pro Rata Acceptance. | N1 |
| CAPS | See Mellon Analytical Services. | N6 |
| Carrez Amendement | French tax rule enacted in 2012 and named after the parliament member who proposed it. The Carrez Amendement limits the deductibility of interest a French company incurs to acquire Shares when the company does not in fact make the decisions pertaining to such Shares. This provision was discussed frequently in French LBOs in 2012. | N1 |
| Carried Interest | a name for the fee structure Private Equity Sponsors commonly use as compensation for managing Private Equity Funds, including the Acquisition, and for managing and disposing of Portfolio Companies. The fee structure (which is not unique to Private Equity Funds) consists of the payment to the PE Sponsor of a specified amount of money (usually a percentage) of proceeds which Private Equity Funds realize on their investments. If properly structured under current tax laws (including US tax laws), Carried Interest will have the same tax attributes in the hands of the PE Sponsor as in hands of other participants in the Private Equity Funds. Since the paradigm for Private Equity Funds is to realize capital gain, not ordinary income, most Carried Interest will also be taxable to the PE Sponsor as capital gain not ordinary income. If, as is almost always the case, the PE Sponsor is an LP or an LLC, the capital gain treatment will flow through to its Partners or Members. | N1 |
| Carried interest | Carried interest or carry, in finance, specifically in alternative investments (i.e., private equity and hedge funds), is a share of the profits of an investment or investment fund that is paid to the investment manager in excess of the amount that the manager contributes to the partnership. As a practical matter, it is a form of performance fee that rewards the manager for enhancing performance. The origin of carried interest can be traced back to the 16th century, when European ships were crossing to Asia and the Americas. The captain of the ship would take a 20% share of the profit from the carried goods, to pay for the transport and the risk of sailing over oceans. In private equity, the distribution of carried interest is directed by a distribution waterfall : in order to receive carried interest, the manager must first return all capital contributed by the investors, and, in certain cases, a previously agreed-upon rate of return (the “”hurdle rate”” or “”preferred return””) to investors. Private equity funds distribute carried interest to the manager only upon a successful exit from an investment, which may take years. The customary hurdle rate in private equity is 7–8% per annum. In a hedge fund environment, carried interest is usually referred to as a “”performance fee””. Hedge funds, because they invest in liquid investments, are often able to pay carried interest annually if the fund has generated a profit for its investors. The manager’s carried-interest allocation will vary depending on the type of investment fund and the demand for the fund from investors. In private equity, the standard carried-interest allocation historically has been 20% for funds making buyout and venture investments. Carried-interest rates – performance fees – among hedge funds have historically also centered on 20%, but have had greater variability than those of private equity funds. In extreme cases performance fees reach as high as 50% of a fund’s profits, although usually it is between 15% and 20%. | N3 |
| Carried interest | the management of a PE fund is usually paid a management fee and a percentage of the added value that the fund realizes for its investors. The percentage is usually paid after the investors have realized a specific return ( see also Hurdle). The fund’s share in the return is called the carried interest. | N4 |
| Carried Interest | Mechanism by which a private equity manager shares in the profits achieved in a private equity fund or investment. Typically, the carried interest will be around 20% of the net gains achieved. | N6 |
| Carry | shorthand for a Carried Interest | N1 |
| Carry | See asset carry. | N6 |
| Carry Trade | Practice of borrowing in currencies with low associated yields and lending in high-yielding currencies. If currency markets are efficient, there should be no gains to the trader, since the yield differential will be offset by changes in the relative exchange rates. | N6 |
| Carry-Over Basis | refers to a transferee’s basis in property, to the extent the basis is determined by reference to the transferor’s adjusted basis in the property | N1 |
| Carve-out | A divestiture is the partial or full disposal of a business unit through sale, exchange, closure or bankruptcy. Divestiture may result from a management decision to no longer operate a business unit because it is not part of a core competency. It may also occur if a business unit is deemed redundant after a merger or acquisition. If jettisoning, a unit increases the resale value of the firm or if a court requires the sale of a business unit to improve market competition. In some cases crown jewels are sold in order to raise funds. | N3 |
| Carve-out | Spinning off or separating out parts of a company or Assets from the Target or the vendor company. This may be done ahead of the transaction. A carve-out is required if only certain subsidiaries, business segments, sites etc. are being sold. For example, intellectual property rights relating to the target must be separated out if they have previously been held centrally by the vendor company. | N2 |
| Carve-out management office (CMO) | A CMO or carve-out management office is the equivalent of a PMO program management office or an IMO integration management office, this time focused exclusively on carve-outs. It’s the team that sits across the various functional work streams – finance, HR, IT, legal, etc., that coordinates the activity and interdependencies between those functions and reports up to the carve-out steering committee, normally across the buyer, the seller, and the Target, and coordinates all of that reporting. | N3 |
| Carve-Out Provision | a provision that creates an exception to a more general provision. For example, an act of war may be carved-out of events that constitute a Material Adverse Change. | N1 |
| Carve-Out Transaction | generally refers to an Acquisition of a subsidiary, business unit or division from a larger enterprise with other operations | N1 |
| Cash | “Cash is legal tender or coins that can be used to exchange goods, debt or services. Sometimes it also includes the value of assets that can be converted into cash immediately, as reported by a company.” | N3 |
| Cash Box Placing | a method of raising cash from a UK Listed Company’s issue of equity Securities, structured through a Special Purpose Entity in order to avoid restrictions on issuing Shares on a non-preemptive basis | N1 |
| Cash Confirmation | a City Code requirement linked to the requirement for Certain Funds. The Cash Confirmation — which is usually given by the Offeror’s Financial Advisor — is needed wherever cash forms part of the purchase price in a UK Public Company Takeover. A Cash Confirmation is a statement in the 2.7 Announcement and in the Offer Document that Bidco has the required cash to pay all accepting shareholders in full. The equivalent concept exists in the HK Takeovers Code. See also Certain Funds. | N1 |
| Cash Election | a Business Combination in which Target Company shareholders can elect to receive cash in lieu of the Bidder’s Stock as consideration for their Equity Interest in the Target Company. Cash Election describes a methodology for delivering consideration to Target Company shareholders in a Business Combination, not the form of the applicable transaction and can be used in a Merger, a Stock Acquisition or an Asset Acquisition. Most commonly, a Cash Election is an alternative to giving each Target shareholder the same mix of Stock and cash consideration received by all other Target Company shareholders. A Cash Election is usually structured so that electing shareholders, and only electing shareholders, can receive all of their Merger Consideration in the form of cash (assuming, of course, that the Cash Election is not Oversubscribed). Reasons for structuring a transaction as a Cash Election include tax considerations for certain types of Target Company shareholders or a clear preference by some shareholders for cash and others for Bidder’s Stock. Ordinarily, a transaction provides a Cash Election when the predominant form of consideration is Stock, and Stock is the default form of consideration. | N1 |
| Cash Equivalent | highly-rated, short-term, liquid investments that are readily Convertible to cash and have short maturities. With regard to a Bond or loan, Cash Equivalents are treated the same as cash and allow the Issuer/Borrower to make unlimited investments in them. | N1 |
| Cash Flow | cash inflows or outflows that are generated over a period by an asset, business, or investment; often supplemented by a qualifier in the given valuation context (e.g., discretionary or operating). See also Net Cash Flow to Equity and Net Cash Flow to Invested Capital. | N7 |
| Cash Flow | Inflow of liquid funds (cash) within a reference period of time. | N2 |
| Cash Flow Risk | Risk that an investor scheme is forced to sell assets to meet liabilities. This can occur when the level of cash flow required to meet benefit payments exceeds the contribution and investment income. | N6 |
| Cash Flow Statement | a Financial Statement in which a company reports its incoming and outgoing cash flows during a specified time period (typically monthly, quarterly or annually) | N1 |
| Cash Free / Debt Free | Method of valuing a company without taking into account debt and cash not required for business operations (Enterprise Value). If this type of valuation is used to determine the purchase price, a Purchase Price Adjustment mechanism is required. This involves adding the Target company’s cash to the base purchase price and subtracting the financial liabilities in order to establish the Equity Value. The sale and purchase agreement must include precise details of the items treated as cash and those treated asfinancial liabilities (often: interest-bearing liabilities). These items are then taken into account in the purchase price adjustment mechanism. As a safeguard against manipulation of cash and debt items, the buyer often requires that the cash free / debt free clause should be accompanied by an adjustment of the target’s (Net) Working Capital. | N2 |
| Cash Free/Debt Free | describes a concept to determine the purchase price for a Target Company on the assumption that the Target Company has neither cash nor indebtedness at the time of Closing. In order to achieve this result, the parties agree to reduce the Enterprise Value by the company’s financial debt and increase the Enterprise Value by the amount of the company’s cash. | N1 |
| Cash hoard | “A large amount of available money held by a company in anticipation of facilitating future projects or meeting future financial obligations. A cash hoard held by a company often makes the company attractive as a target of acquisition because of its sound financial situation.” | N3 |
| Cash Management | summary of the liquid funds held by various subsidiaries at a group’s Parent company or held by a specific operating company in a Liquidity pool | N1 |
| Cash Merger | a Merger where the Merger Consideration consists solely of cash | N1 |
| Cash Pool | System of cash aggregation and liquidity management for groupinternal purposes via a central account, usually held by the parent company. Surplus cash is transferred from individual group companies or payments are made to correct debit positions. From a legal viewpoint, the payment flows are classified as loans ( Upstream Loans and Downstream Loans, respectively). A distinction is made between a “physical” cash pool and a “notional” cash pool. In the latter case, credit and debit balances are offset by the company’s bank without any actual payments being made. | N2 |
| Cash Pooling | synonym for Cash Management | N1 |
| Catalist | refers to the SGX Catalist Listing. A company seeking a listing on Catalist must meet certain admission requirements, including sponsorship, Offer Document, Working Capital and shareholding spread. | N1 |
| Catch-all Clause | Clause that contains general wording designed to cover other conceivable cases / circumstances not explicitly provided for in the contract. Clauses of this type are especially appropriate if it is not possible to rule out the existence of other circumstances (e.g. claims to be transferred) in addition to specific known cases and the contract needs to make provision for such matters. | N2 |
| CBO | Collateralised bond obligation. See collateralised debt obligation. | N6 |
| CBs | shorthand for Convertible Bonds | N1 |
| CCASS | acronym for the Central Clearing and Settlement System in Hong Kong | N1 |
| CCL | see Commercial Companies Law of Qatar | N1 |
| CCS | acronym for Competition Commission of Singapore | N1 |
| CDO | See collateralised debt obligation. | N6 |
| Cede & Co. | Cede & Co. is the Owner of Record for Shares held by DTC | N1 |
| Central Clearing | Process designed to reduce counterparty risk which is present in bilateral over-thecounter derivative trades by clearing with a single central counterparty. | N6 |
| Central Clearing And Settlement System | the system in Hong Kong operated by Hong Kong Securities Clearing Company Limited (a wholly-owned subsidiary of HKEx) to provide Securities clearing and settlement services in relation to trades executed on the Hong Kong Stock Exchange. This electronic system also provides related services to system participants. Often abbreviated as CCASS. | N1 |
| Central Counterparty Clearing House (CCP) | An organisation that helps facilitate trading done in derivatives and equities markets. There are two main processes that are carried out by CCPs: clearing and settlement of market transactions. | N6 |
| Central Depository (Pte) Limited (CDP) | Singapore organization analogous to the US Depository Trust Company, providing centralized Administration, clearing and settlement services. See Depository. | N1 |
| Centre of Main Interests | the test used to determine in which country a company is able to file Insolvency proceedings that will be organized as “main proceedings” under the EU Insolvency Regulation. Known colloquially as COMI. See also COMI Shift. | N1 |
| CEO | shorthand for “chief executive officer,” the CEO is the highest ranking executive officer of a company, in charge of managing a company’s day-to-day affairs | N1 |
| CEO | Chief Executive Officer | N2 |
| Certain Funds | generally, a bank’s affirmation to provide for a certain amount of time the loans agreed on under the Facilities agreement. The Takeover Panel and a number of comparable European regulators in Public Company Takeovers also require Certain Funds. In order for the Cash Confirmation to be issued (or equivalent step taken in jurisdictions other than the UK), the Financing Commitments for a Going Private transaction need to be almost completely condition free (so the Bidder can be “certain” that it will have the funds when it needs them). Although the Certain Funds requirement only applies as a matter of regulation to Acquisitions of European Public Companies, Buyers of Private Companies may also seek from their Lenders Certain Funds commitments to provide the required financing, in particular in LBO transactions. Such Buyers argue Certain Funds gives them a competitive advantage over other Bidders who do not have Certain Funds. See also Cash Confirmation, City Code and Blue Book. | N1 |
| Certain Funds | Bank loans taken out by the buyer to finance the transaction, with an assurance being given on Signing the sale and purchase agreement that they can be drawn down. The purchase price is usually due at a later stage, on completion of the transaction (Closing). | N2 |
| Certificate of Deposit (CD) | Tradable certificate showing that a particular sum has been deposited with a bank for a certain time at a certain interest rate. CDs are non-interest bearing and are quoted at a discount to their par redemption value. | N6 |
| Certificate of Good (Legal) Standing | Evidence that a company has been properly established and is in effective existence. This type of confirmation is required in particular 21 C for companies based in jurisdictions where there is no register of companies that has the equivalent legal force of the German commercial register. Depending on the jurisdiction to which the company is subject, a certificate of good (legal) standing may be issued by a notary, a lawyer or by an officer of the company (e.g. the company secretary). The specific requirements must be established for the given case. | N2 |
| Certificate of Good Standing | 1. (US) a document issued by the Secretary of State (or comparable official) of the company’s jurisdiction of incorporation certifying that the company is in good standing (i.e., all fees, taxes and penalties owed to the regulator have been paid, annual reports have been filed, no articles of dissolution have been filed, etc.) as of the date of the certificate. Usually ordered in connection with a Closing. 2. (UK) a certificate that can be obtained from Companies House which, if a company is in “good standing,” will state that the company has been in continuous, unbroken existence since its incorporation and no action is pending to strike the company off the register. The following details can also be requested and added to the certificate: (i) directors’ names; (ii) secretaries’ names; (iii) registered office; (iv) issues capital; (v) shareholders (names, shareholdings); (vi) company objects; and (vii) additional information such as dates of birth, nationality, etc. 3. (DEU) usually required if Common Law governed entities are involved in a deal 4. (FRA) the closest equivalent in France is a Certificate issued by the Registry of Commerce and Companies stating that the Company is not undergoing Bankruptcy proceedings 5. (HKG) the closest equivalent in Hong Kong is a Certificate of Continuing Registration from the Companies Registry which states that a Hong Kong incorporated company or non-Hong Kong company registered in Hong Kong under the Companies Ordinance, as the case may be, remains on the Register of Companies at the specified date, as well as the company’s date of incorporation/registration. 6. (ITA) a certificate issued by the competent Company Register, attesting that a company is validly incorporated and existing (i.e., not subject to Winding Up procedures and possible Bankruptcy procedures) 7. (RUS) the equivalent under Russian law would be an Excerpt from the Unified State Register of Legal Entities, which contains factual information about the company (such as number of registration, address, licenses held, and shareholders — in certain cases). The Excerpt does not contain compliance information or financials. 8. (SGP) a Certificate of Good Standing is issued by ACRA and certifies the existence of a company registered in Singapore. ACRA may also issue a Certificate of Compliance which certifies, among other things, that the company has: (i) promptly filed the requisite year’s Annual Return and confirmed the accuracy of the information stated therein; (ii) no other year’s Annual Return due or outstanding; and (iii) confirmed that it has tabled its statutory accounts for the relevant financial year at its annual general meeting for shareholders’ approval and that the company’s statutory accounts for that year have been filed on a timely basis. |
N1 |
| Certificate of Incorporation | 1. (US) specifically, the name for the Charter of a Delaware corporation
2. (UK) the document issued by Companies House in England and Wales (or the applicable companies’ registrars in some other jurisdictions) on the registration and formation of a company as a separate legal entity 3. (DEU) specifically, refers to the deed of foundation of a Limited Liability Company (Gesellschaft mit beschränkter Haftung) 4. (FRA) the document issued by the Registry of Commerce and Companies called extrait K-bis under French law, certifying that the company is incorporated from a specified date and containing basic information relating to the company such as share capital, registered offices, the identity of legal representatives, corporate purpose, etc. 5. (HKG) the document issued by the Hong Kong Registrar of Companies certifying the incorporation of a company under the Companies Ordinance 6. (SGP) the document issued by the Registrar of Companies certifying that the company is incorporated from a specified date |
N1 |
| Certificate of Merger | a document filed with and accepted by the applicable Secretary of State (or comparable official) evidencing a Merger of two or more entities into one entity | N1 |
| Certificate of Title | 1. (UK) a written opinion of legal counsel stating that the title for the relevant real property is vested as stated in the chain of title. Where real property has a material value, Lenders may require these as a Condition Precedent. Not required in jurisdictions where title to real property is publicly registered and is therefore conclusively evidenced by an official excerpt from that register. 2. (HKG) a written confirmation from a Hong Kong law firm (usually the Issuer’s Hong Kong counsel) as to good title to real properties in Hong Kong, including any significant issues of note 3. (SGP) a certificate issued by the land authority in Singapore in respect of title to real property |
N1 |
| Certificated | where a certificate (as opposed to an electronic Depositary and clearing system) represent a Share or other Security. Compare Uncertificated. See also American Depositary Receipt and American Depositary Shares. | N1 |
| Certified Accounts | Confirmed and audited financial statements, see Annual Accounts; Annual Financial Statements. | N2 |
| Certified Public Accountant | Professional designation of an auditor in the United States (CPA). | N2 |
| Cessation des Paiements | in France a company is in a state of Cessation des Paiements when it is unable to pay its debts as they come due out of available company assets. The officers of a company that has not petitioned for the opening of Conciliation Proceedings are required to petition for the opening of Redressement Judiciaire or Liquidation Judiciaire within 45 days of the company’s Cessation des Paiements, failing which they may be personally exposed to civil liability. | N1 |
| CFA Institute | International non-profit organisation composed of more than 90,000 individual voting members and 136 non-voting member societies whose mission is to set a higher standard of professional excellence for the investment profession. Individual members either hold the CFA designation or are active in the investment business and agree to abide by the CFA Institute ethical requirements. The CFA Institute administers the CFA Examination and is responsible for the Global Investment Performance Standards (GIPS™). Previously called the Association for Investment Management and Research (AIMR). (See also GIPS, UKIPS.) | N6 |
| CFA® | See Chartered Financial Analyst. | N6 |
| CFC | acronym for Controlled Foreign Corporation | N1 |
| CFIUS | acronym for the Committee on Foreign Investment in the United States (CFIUS). See also Foreign Investment Rules. | N1 |
| CFO | shorthand for “chief financial officer,” the CFO is the senior officer of a company primarily responsible for managing the company’s financing and (usually) accounting activities | N1 |
| CFO | Chief Financial Officer | N2 |
| CGT | acronym for Capital Gains Tax | N1 |
| CGT | See capital gains tax. | N6 |
| Chain of Title | Historically complete proof of share ownership (Shares), in order that the seller’s entitlement to transfer the shares can be verified in the course ofDue Diligence. In the case of a private limited company, it is not sufficient merely to be able to trace the complete ownership history via the register of members (i.e. shareholders). | N2 |
| Chain Principle | 1. (UK) an obligation under the City Code (and under the applicable rules of other regulators of other European Public Companies) to launch an Offer for a subsidiary company in the event that a party makes an Offer for a significant majority shareholder/controlling company (which may or may not be subject to the City Code/other European regulators) 2. (FRA) an obligation to launch a Mandatory Offer under French law in the event of an Acquisition of a company which itself holds more than one third of the Share Capital or voting rights of a Listed Company 3. (HKG) under the HK Takeovers Code, in certain circumstances where an acquirer or acquiring group acquires control of a Target and thereby simultaneously acquires the control of a second Public Company in Hong Kong, the acquirer or acquiring group may be required to extend an offer to purchase the Shares of the second company 4. (ITA) called OPA “indiretta” or “a cascata,” governed by Article 45 of Regulation no. 11971 of 1999 5. (SGP) the Singapore Takeover Code explains the “Chain Principle” as where a person or Group of persons Acting In Concert to acquire statutory control of a company (which need not be a company to which the Singapore Takeover Code applies) acquires or consolidates Effective Control (as defined in the Singapore Takeover Code) of a second company because the first company itself holds (either directly or indirectly through intermediate companies) a controlling interest in the second company, or holds voting rights which, when aggregated with those already held by the person or Group, secure or consolidate Effective Control of the second company |
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| Chain Principle Bid | see Chain Principle | N1 |
| Change in Board Recommendation | one of a number of common terms used in Acquisition Agreements to describe a decision by the Board of Directors of the Target Company that would be inconsistent with its total support of the particular deal. The most common type of inconsistent action would be a withdrawal of the Board’s recommendation to shareholders that they approve the particular deal. However, the term usually encompasses other actions by the Board of Directors, such as recommending in favor of another deal, refusing to reaffirm an earlier Board Recommendation or refusing to recommend against a Unilateral Tender Offer by a Competing Bidder. | N1 |
| Change in Control | see Change of Control | N1 |
| Change of Control | an event or series of events involving a change in ownership, Management or Board composition of a company. A Change of Control may Trigger provisions in various agreements or contracts intended to protect designated parties from changes in circumstances that could result from a Change of Control of a company. A 100 percent Acquisition transaction will constitute a Change of Control. However, the term is usually defined far more broadly, so that an Acquisition of 50 percent or somewhat less (e.g., 45 percent, 40 percent, or under French law in certain circumstances, 33 percent) of the beneficial ownership of a company’s outstanding Capital Stock, a change in the senior executive line-up of the company and/or a defined change in the membership of the Board of Directors will also constitute a Change of Control. Parties typically protected by Change of Control Provisions include executive officers (e.g., through Parachute Payments), employees more generally (e.g., through automatic Stock Option Acceleration provisions in Stock Option and other Stock based incentive compensation plans), and debt holders (through Acceleration provisions in the debt agreement) that in each case are triggered by a Change of Control of the company. Also called a CIC, COC or Change in Control. | N1 |
| Change of Control | Clause Specifies the legal consequences in the event of a change of control; special rights of termination are often provided for the other party. Contracts that are of crucial importance to the Target company must therefore be reviewed for Change of Control Clauses in the course of Due Diligence. | N2 |
| Change of Control (CoC) | Change in the control of a company (see also Change of Control Clause). | N2 |
| Change of control clause | Often referring to target contracts. A clause in a contract with the target stipulating that the contract will either no longer be valid if there is a change in control of the company, or that it will trigger certain action or events. | N3 |
| Change of Control Clauses | clauses in agreements concluded by the company (e.g. for a loan from a bank), that stipulate that the contract will no longer be valid or will be dissolved if there is a change in control of the company. Identification of the Change of Control Clauses is an important part of the analysis of the legal continuity of the acquisition. | N4 |
| Change of Control Clauses | clauses in company agreements that stipulate that the contract will no longer be valid or will be dissolved if there is a change in control of the company. Identification of Change of Control Clauses is an important part of any legal due diligence and analysis of the legal continuity of the acquisition. | N5 |
| Chapter 11 | part of the US Bankruptcy Code and the part most often discussed — as it governs Reorganizations of bankrupt companies in an attempt to turn them around and ensure their survival. Chapter 11 has been used by certain European groups as a Restructuring tool. | N1 |
| Charasse Amendement | French tax rule named after a former French minister of budget which limits the deductibility of interest on debts incurred to finance Acquisitions from related parties if the Target enters the same tax consolidated group as the Acquirer. Non-tax lawyers are very much afraid of it although it sometimes does not Trigger any effective tax leakage. | N1 |
| Charter | a name for the fundamental document prescribed under state or national corporate laws, as applicable, to create a valid corporation that qualifies for limited liability and all other state or national conferred aspects of incorporation 1. (US) generally called the Articles of Incorporation (California and other states) or the Certificate of Incorporation (Delaware), under the enabling policy of US state corporate statutes, which must contain a few essential provisions (e.g., name of entity, names of incorporators, authorized Classes of Stock, number of authorized Shares of each Class, and may contain any number of other permissive provisions dealing with the rights and powers of the corporation and the governance provisions of the corporation). The Charter can be adopted, amended, or rescinded only by action of the Board of Directors followed by an approving shareholder vote (ranging from a majority of votes held by all outstanding voting Securities to a Supermajority of such votes, such as 66 2/3 percent, 75 percent or 80 percent) specified in the state corporation statute or in the Articles of Incorporation itself. Because of the need for both Board and shareholder approval, Articles of Incorporation are usually thought of as being less flexible and more permanent than Bylaws which can typically be amended by either directors or shareholders acting unilaterally. 2. (UK) analogous to the concept of a company’s “Constitution” or the Constitutional Documents, which in the UK are not explicitly defined but are generally deemed to comprise the company’s Articles of Association (see also Bylaws), its Memorandum of Association (no longer required for UK companies), and any resolutions or agreements with shareholders to which Part 3, Chapter 3 of the UK Companies Act applies 3. (DEU) called Articles of Incorporation 4. (FRA) see Bylaws 5. (HKG) in Hong Kong this refers to the company’s Memorandum of Association and Articles of Association. The new Companies Ordinance (which is due to come into force in 2014) will abolish the Memorandum of Association, leaving the Articles of Association as the sole constitutional document of a company. 6. (ITA) called atto costitutivo, containing the Bylaws as an attachment 7. (QAT, SAU, UAE) called a Commercial Registration, Industrial License or Trade License, this is the constituent document issued by the relevant authority (e.g., the Dubai Economic Department or the Saudi Ministry of Commerce and Industry) on incorporation. The certificates are simple and state the name of the company, its activities, its shareholders and often the general manager. 8. (RUS) the constituent document of a company, regulating certain fundamental issues 9. (SGP) a Singapore company’s Constitutional Documents consist of three distinct documents: a Certificate of Incorporation, Memorandum of Association and Articles of Association. The Certificate of Incorporation (issued by the Registrar of Companies) certifies that the company is incorporated from a specified date. The Memorandum of Association is the company’s constitution, and sets out the company’s structure and aims. The Articles of Association sets out the internal regulations by which the company is governed (analogous to Bylaws). |
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| Chartered Financial Analyst (CFA®) | Qualification awarded by the CFA Institute. Its curriculum develops and reinforces fundamental knowledge of investment principles. Examinations measure a candidate’s ability to apply these principles at a professional level. (See also CFA Institute.) | N6 |
| Chartism | Form of technical analysis where charts are used to identify trends and study movements in share prices or financial and economic indicators, with the aim of predicting future (often short-term) changes in stock market prices. | N6 |
| Chief Executive Officer (CEO) | Head of the management board or managing director of a company. The term originates from the one-tier (unitary) system of Corporate Governance that is widespread in Anglo-American jurisdictions. | N2 |
| Chief Financial Officer (CFO) | Finance director or head of the finance department in a company. The term originates from the one-tier (unitary) system of Corporate Governance that is widespread in Anglo-American jurisdictions. | N2 |
| Chilling a Sale | a term describing actions by a third party that would deter or preclude a sale of a company. Examples include a statement by a large, minority shareholder opposing a sale, a statement by a CEO or senior Management of unwillingness to work for a particular Bidder or for a specified type of Bidder, or adoption of Takeover Defenses that would effectively deter or preclude an Unsolicited Bid. | N1 |
| Chinese Wall | A barrier created by organisational measures to prevent the exchange of information between different departments of a company, a law firm, etc.; a Chinese wall is required if an investment bank advises two bidders in the context of a Bidding Process, for example. | N2 |
| Chinese Wall | Separation of activities in a financial institution to prevent confidential and/or price-sensitive information from passing from one area to another. For example, it is normal practice for a financial services institution to separate corporate finance, stockbroking and fund management using Chinese walls. | N6 |
| Churning | Excessive trading of an investor’s portfolio. Sometimes used unethically to generate extra commissions. | N6 |
| CIC | acronym for Change in Control | N1 |
| CIF | See common investment fund. | N6 |
| CIM | acronym for Confidential Information Memorandum | N1 |
| Circuit Breaker | Stock exchange rule or other action designed to maintain orderly trading during periods of market, for example by preventing computer-generated trades from sending the market into a downward spiral. | N6 |
| Circular | see Shareholders’ Circular | N1 |
| Circular merger | Companies producing distinct products seek amalgamation to share common distribution and research facilities and promoting market enlargement. The acquiring company benefits by economies of resource sharing and diversification. | N3 |
| City | in some contexts, shorthand for the City of London financial district | N1 |
| City Code | short for the City Code on Takeovers and Mergers. See Blue Book and the UK Takeover Code. | N1 |
| Civil Code (UAE) | UAE Federal Law No.5 of 1985 regarding Civil Transactions (as amended) | N1 |
| Clandestine takeover (or) creeping takeover | Gradual accumulation of shares with the intent of acquiring a controlling stake. One can buy up to a 5% stake in a company without any prior permission. After 5%, they should inform the stock exchange. | N3 |
| Class | a term used to describe different types of a company’s Capital Stock, so that Common Stock and Preferred Stock would be different Classes of the company’s Capital Stock. Also, a generic name for Securities, which differ in terms of rights and privileges from similar Securities of the same rank in terms of a company’s Capital Structure. For instance, a company may have two or more Classes of Common Stock, and/or two or more Classes of Preferred Stock. 1. (FRA) as a general principle, French law does not allow the issuance of different Classes of Common Stock (action ordinaire), except to some extent for the SAS type of French corporation. Preferred Stock is usually used for Shares of different Classes (actions de préférence). | N1 |
| Class | The category to which a security belongs, e.g. ordinary shares or non-voting preference shares. | N2 |
| Class of Shares | see Class | N1 |
| Class Voting | a type of voting for holders of different Classes of a company’s Capital Stock, under which each specified Class must approve the action in question by a majority or higher vote specified in the Charter. | N1 |
| Classified Board | a Board composed of two or more classes of directors, with each class elected in a different year. The almost universal pattern is three classes of directors, with each class serving a three-year term, resulting in an election for one third of the directors each year. Also referred to as a Staggered Board. 1. (FRA) There is no such obligation for a Classified Board under French law. However, the AMF and the corporate governance codes recommend that the directors be elected by tier each year. | N1 |
| Clawback | a Buyer’s right to the return of previously paid Merger Consideration if certain conditions are met. Compare Earn-Out. | N1 |
| Clean Fees | All-inclusive fund management fees, to which no additional charges (e.g. custody, administration) will be added. | N6 |
| Clean Room | the name often given to a Due Diligence mechanism by which a third party expert (or Clean Team) examines sensitive information on a Target Company’s business (often in a physically separate space). The expert analysis is more often done by appropriate third party professional firms, not company employees, so the parties can continue to act as competitors as required by various antitrust regulators. 1. (DEU) often called a “Red Data Room” | N1 |
| Clean Team | see Clean Room. The same expert team often prepares a Synergies or Merger Benefits analysis for various different Bidders using a Bidder’s input data. | N1 |
| Clean team | a team consisting of independent advisors, mandated by both buyer and seller, to review information that is mutually sensitive to buyer and seller. The clean team gathers confidential information, anonymises it, an presents a ‘clean’ analysis to buyer and seller. | N3 |
| Clean team | a clean team exists when an advisor is asked by both the selling and the buying parties to review a very specific topic that contains sensitive information, such as the customer portfolio. The clean team receives all the information, but only provides a summarized analysis to its clients (the buyer and the seller together). The parties could agree that, for example, the sale will not proceed if one of the top five customers disappears. If the seller would rather not disclose the identity of the customer, a ‘clean team’ scenario could offer a way out, since the clean team can analyze the customers and report on them on an anonymous basis. | N4 |
| Clean Team | Formed to allow the exchange of information within a group of individuals covered by special NDAs. The team (which often consists solely of advisors) shares information which typically cannot yet be shared between the parties for competition law reasons. | N2 |
| Cleantech | Products, services and processes geared towards reducing or eliminating the environmental impact of a means of production. May include investments in agriculture, energy, manufacturing, materials, technology, transportation and water. | N6 |
| Clearing House | Institution positioned between two respective counterparties and responsible for the trade settlement, thus removing counterparty risk from both parties. | N6 |
| Clearstream | Clearstream Banking S.A. acts mainly as International Central Securities Depository (ICSD). Clearstream also acts as the Central Securities Depository (CSD) for Germany and Clearing House for a number of Securities. See Depository. | N1 |
| Close | shorthand for Closing | N1 |
| Closed-end fund | “A closed-end fund (CEF) or closed-ended fund is a collective investment model based on issuing a fixed number of shares which are not redeemable from the fund. Unlike open-end funds, new shares in a closed-end fund are not created by managers to meet demand from investors. Instead, the shares can be purchased and sold only in the market. Closed-end funds are usually listed on a recognized stock exchange and can be bought and sold on that exchange. The price per share is determined by the market and is usually different from the underlying value or net asset value (NAV) per share of the investments held by the fund. The price is said to be at a discount or premium to the NAV when it is below or above the NAV, respectively. A premium might be due to the market’s confidence in the investment managers’ ability or the underlying securities to produce above-market returns. A discount might reflect the charges to be deducted from the fund in future by the managers, uncertainty due to high amounts of leverage, concerns related to liquidity or lack of investor confidence in the underlying securities. In the United States, closed-end funds are referred to under the law as closed-end companies and they form one of three SEC recognized types of investment companies along with mutual funds and unit investment trusts. Examples of closed-ended funds in other countries are investment trusts in the United Kingdom and listed investment companies in Australia.” | N3 |
| Closed-end fund | a fund with a limited investment horizon. Often, a few years will be allocated for investing: several years for the growth of the company, and several years for its sale. Closed-end funds seek to complete this entire cycle in 6-12 years. | N4 |
| Closed-end Fund | Collective investment schemes that issue a fixed number of shares which are then usually traded on a stock exchange. The price of each share is determined by supply and demand in the marketplace. The share price may stand at either a discount or premium to the net asset value of the underlying investments. Investment trusts are examples of closed-end funds. (See also open-ended funds.) | N6 |
| Closet Indexing | Running of an “active” portfolio by an “active” fund manager where the fund’s holdings are insufficiently different from the composition of the index for the fund’s performance to deviate significantly from the index. | N6 |
| Closing | the consummation of the transaction when all remaining documents are executed and the money changes hands | N1 |
| Closing | The “closing” the final settlement between the contracting parties, triggering the payment in exchange for the change of ownership. The closing follows another pivotal moment in a transation: the “signing”. | N3 |
| Closing | Completion of the transaction in rem; once all the Closing Conditions have been met, title to the Shares or Assets is transferred to the buyer against payment of the purchase price due; this is preceded by conclusion of the sale and purchase agreement under the law of obligations (in personam) (Signing). | N2 |
| Closing account | The account balances in the balance sheet as per a day agreed in the Sale and Purchase Agreement (SPA) are called the Closing Accounts. They are used to determine the value of certain elements described in the SPA, such as net debt and working capital, and have an influence on the payment as per closing. | N3 |
| Closing Accounts | the reference accounts used by the transaction, against which any post-Closing adjustments are applied to determine the final purchase price. Contrast with Locked Box. 1. (UK and HKG) generally referred to as Completion Accounts | N1 |
| Closing accounts | when the agreement is recorded in an SPA, a future date on which a balance sheet is to be drawn up (the closing accounts) is agreed. These closing accounts will then form the basis for determining the net debt and the working capital that will be used for determining the final price according to the agreed price formula. | N4 |
| Closing Actions | measures and actions to be taken at Closing | N1 |
| Closing Actions | Action to be taken on or before the Closing Date; typical examples include payment of the purchase price and resignation of the Target’s board members. | N2 |
| Closing agreement | the agreemen on the final settlement between the contracting parties, which will trigger the payment in exchange for the change of ownership. | N3 |
| Closing agreement | the document setting out the final settlement of the agreement after the CPs have been met. This document results in the transfer of ownership and the payment taking place. | N4 |
| Closing Condition | another name for a Condition Precedent | N1 |
| Closing Conditions | Often referred to as Conditions Precedent; conditions defined by contract (often in the form of preconditions, but also sometimes in the sense of genuine conditions precedent as defined in section 158 (1) of the German Civil Code (BGB)), which must be satisfied in order for the transaction to be completed (Closing). Examples include merger control approval, consent of shareholders in the event of Restrictions on Share Transferability, discharge of the company’s board members and their resignation. Satisfaction of all closing conditions may be recorded in a Closing Memorandum. | N2 |
| Closing Confirmation | declaration by the parties of an Acquisition Agreement after Closing according to which the parties confirm all Closing Conditions are fulfilled and that all Closing Actions have been completed | N1 |
| Closing Confirmation | Closing Memorandum. | N2 |
| Closing Date | the date on which the Closing occurs | N1 |
| Closing Date | Date on which the sale and purchase agreement is completed. | N2 |
| Closing Deliveries / Closing Deliverables | Documents exchanged between the parties on Closing. | N2 |
| Closing Dinner | your reward. A dinner usually organized by the bankers to celebrate the Closing of the transaction. The better the deal, the better the wine. | N1 |
| Closing Dinner | Celebration to mark the Closing of a transaction. | N2 |
| Closing Memorandum | a formal, detailed memorandum used in Acquisitions and LBOs to set forth actions taken prior to and at Closing | N1 |
| Closing Memorandum | Document in which the contracting parties confirm satisfaction of all the conditions for Closing (Closing Conditions; Conditions Precedent) (usually) for proof purposes (also called Closing Confirmation). | N2 |
| Closing Price | Price at which the final market transaction in a security took place on a particular business day. | N6 |
| Closing Set | another name for a Bible | N1 |
| Club Deal | refers to an LBO transaction where multiple Sponsors join together in order to buy a target | N1 |
| Club deal | “A club deal, in finance, refers to a leveraged buyout or other private equity investment that involves two or more private equity firms. It can also be referred as consortium or syndicated investment. In a club deal, the investor group of private equity firms pools its assets together and makes the acquisition collectively. The practice has allowed private equity to purchase larger and more expensive companies than each firm could acquire through its own private equity funds. By syndicating the equity ownership across a group of investment firms, each firm reduces its concentration and is able to maintain the diversification of its portfolio of investments.” | N3 |
| Club Deal | In this type of transaction, several companies join forces to conduct a deal collectively (acting on one side of the contract). | N2 |
| Club deals | an agreement in which various funds pool money with a view to an investment that would not be possible on an individual basis because of the amount involved or specific investment restrictions. | N4 |
| CMA | 1. (UK) shorthand for the UK’s Competition and Markets Authority 2. (SAU) the Capital Market Authority of the Kingdom of Saudi Arabia, including where applicable any committee, sub-committee, employee or agent to which any function of the Capital Market Authority may be delegated |
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| CML | Capital Market Law in the Kingdom of Saudi Arabia issued by Royal Decree No. M/30 dated 2/6/1424H | N1 |
| CMPO | a confidentially marketed public offering | N1 |
| Coattail Investing | Trading strategy in which investors duplicate the performance of a successful (and usually well-known) investor by copying his or her trades as soon as they are made public. This is a risky strategy, as there is a time delay between when the successful investor’s trades occur and when they are made public. | N6 |
| COC | acronym for Change of Control | N1 |
| CoC | Change of Control. | N2 |
| CoCo/Comparable Company | if a comparable company is listed on a stock exchange, we can determine the market capitalization of the company based on the share price multiplied by the number of shares. | N4 |
| Code of Conduct | Written standards of behaviour, often defined as part of a company’s Compliance programme. | N2 |
| CoE/Cost of Equity | the cost of capital, determined by equating it to the required return that average investors want to achieve on their investments, on the basis of the company’s risk profile. A classic way to determine the CoE is by applying the CAPM. CoE = RF + Beta x MRP + Alpha | N4 |
| Coercive | when used in the context of the Unocal/Unitrin Doctrine, Coercive means a Takeover Defense in a US Public Company M&A, which by its structure forces or tends to force stockholders to forego the choice of accepting or voting for a Takeover Bid. The term is also used in the context of describing Takeover Bids which are structured so as to dissuade stockholders from rejecting a Takeover Bid, even if they perceive it as unfavorable (i.e., a Bid whose terms would economically damage any stockholders who do not accept). At its root, the judicial concept of Coercive in the context of M&A situations refers to structural or substantive provisions that threaten stockholders’ ability to choose whether or not to accept a Takeover Bid. | N1 |
| Coffin | a term for death benefits, typically used in combination with the words Golden or Silver (as in Golden Coffin benefits or Silver Coffin benefits) | N1 |
| Co-Invest | describes two or more Investors who join together in an investment on substantially identical terms | N1 |
| Co-investment | an investor who also invests in a specific buy-out alongside the investment fund, in principle under the same conditions as the investment fund. | N4 |
| Cold Comfort Letter | see Comfort Letter | N1 |
| Cold Shoulder | the most severe of sanctions available to the UK Takeover Panel. Used to freeze individuals — involved in the most serious breaches of City Code from doing Takeover related business in the City. The equivalent concept exists in Hong Kong under the HK Takeovers Code, and the order imposed denies the persons access to the securities markets in Hong Kong. | N1 |
| Co-Lead Manager | a Lender bank which is next to a leading consortium bank at the top of a lending syndicate | N1 |
| Collar | see Exchange Ratio Collar | N1 |
| Collar Hedge | Investment strategy obtained through a combination of put and call options. This option-based strategy results in stabilised portfolio returns by obtaining protection against a major decline in portfolio value in exchange for the sacrifice of part of the portfolio’s appreciation in a major rally. | N6 |
| Collateral | All types of security for loans. | N2 |
| Collateral | Assets placed on deposit as security for an open position (e.g. loan, swap, short sale), which may be used to offset the potential loss by a counterparty should the first party default on its obligation. | N6 |
| Collateralised Debt Obligation | Securities backed by various types of claims and assets. | N2 |
| Collateralised Debt Obligation (CDO) | One of a series of bond-type investments, backed by a pool of assets, such as loans or mortgages, which can be tailored to match one or more investor’s requirements in terms of credit rating, risk, duration, timing of payments, etc | N6 |
| Collateralised Loan Obligation | Securities backed by a pool of company loans. | N2 |
| Collateralised Mortgage Obligation (CMO) | Security that pools together mortgages and separates them into tranches paying different rates of interest, depending on their terms to maturity. In most CMOs, coupons are not paid on the final tranche until all other tranches have been redeemed (the coupons are added to the capital outstanding in the interim). Such a tranche is called an accretion bond, an accrual bond or a Z-bond. | N6 |
| Combination | another name for a Business Combination or for a Statutory Combination. See also Amalgamation. | N1 |
| Combination Agreement | sometimes used to refer to an agreement providing for the Statutory Combination of one of the parties with one or more of the other parties. More generically, another name for an Acquisition Agreement. | N1 |
| Combined Code | Code of good practice in corporate governance in the UK, set out in the Cadbury, Greenbury, and Hampel and Higgs reports. Among other things, the Code refers to institutional shareholders, encouraging them to take responsibility for voting and, where appropriate, to enter into dialogue with the companies in which they invest. | N6 |
| Comfort Letter | a letter from a company’s auditors addressed to the counterparty in an Acquisition transaction that provides “comfort” that the numbers included in a particular Financial Statement (usually included in a disclosure document) are accurate. In the US, the Statement on Auditing Standards number 72 (SAS 72) spells out the prescribed form a Comfort Letter should take. The party receiving the Comfort Letter usually wants the Comfort Letter to establish that the party’s Board exercised appropriate due care and/or to establish a Due Diligence defense. The Comfort Letter allows the recipient to demonstrate reliance on experts for the audited financials and an element of a “reasonable investigation” for the unaudited financials and other unaudited financial information. Comfort Letters are uncommon in M&A transactions. The timing of a Comfort Letter’s delivery will be specified in the Acquisition Agreement, as well as whether a Bring Down Comfort Letter will also be required and, if so, when. | N1 |
| Comfort Letter | Also called a Letter of Comfort, in which (usually) the parent company makes a commitment to provide the Target with the necessary funding in the event of economic difficulties (binding letter of comfort). In the case of a non-binding letter of comfort, the parent company merely makes an expression of goodwill which has no legal force, although it is normally seen as creating a moral obligation. | N2 |
| COMI | acronym for Centre of Main Interests | N1 |
| COMI Shift | the process used by Restructuring professionals of migrating or moving a company’s COMI from a jurisdiction with less favorable Insolvency laws and formal processes to a jurisdiction with more favorable conditions for Restructuring or (sometimes, if acting for a Sponsor or Borrower) vice versa. COMI Shifting to the UK has been common, in particular to implement Schemes of Arrangement. | N1 |
| Comisión Nacional de la Competencia (CNC) | a Spanish public agency (independent of the Spanish Government) charged with preserving, guaranteeing and promoting effective competition in Spanish markets. CNC also ensures the Spanish Competition Act (Ley de Defensa de la Competencia) is consistently applied by: exercising the functions conferred by the Act; coordinating the activities of industry regulators and the competent offices of the autonomous regions, as well as cooperating with the competent courts. CNC, together with the European Commission, also directly enforces EU competition rules. See European Commission. | N1 |
| Commencement Date | most commonly used to identify the date a defined period begins, such as a Tender Offer Period or a Marketing Period for the sale or placement of Securities. Knowing precisely how to determine a Commencement Date is critical in determining when the measured period ends. For example, in the US “Commencement Date” is a defined term under the SEC Tender Offer Rules under the 1934 Act because many of the SEC Tender Offer Rules are based on time periods that begin on the Commencement Date. Commencement Date in other contexts is a contractual term, so ensure the contract clearly defines the date. | N1 |
| Commercial Code (UAE) | UAE Federal Law No.18 of 1993 regarding Commercial Procedures (as amended) | N1 |
| Commercial Companies Law of Qatar | refers to Law No. (5) of 2002 (as amended) | N1 |
| Commercial due diligence | a diligent analysis of the target’s customer segments and markets, how it operates in it, what its position is, and how its sales channels are organised and remunerated. | N3 |
| Commercial due diligence | the review of the markets in which the company operates and the commercial position in which the company finds itself. | N4 |
| Commercial due diligence | the review of the markets in which the company operates and the commercial position of the company. Usually undertaken by the purchaser’s accountants or advisers. Also, banks if bank debt is involved in the deal. | N5 |
| Commercial Due Diligence | Area of Due Diligence that considers the Target’s business model and its external environment with regard to market, industry and competitors. | N2 |
| Commercial Mortgage-backed Security (CMBS) | Mortgage-backed security collateralised by commercial rather than residential mortgage loans. Unlike residential MBSs, CMBSs are not usually subject to prepayment risk, as most underlying loans do not permit prepayment without substantial penalties. | N6 |
| Commercial Paper | Unsecured short-term debt issued by banks, corporations and other borrowers. | N6 |
| Commercial Registration | see Charter | N1 |
| Commingled Fund | See pooled fund. | N6 |
| Commission | Fee paid to a stockbroker for buying or selling a security, usually calculated as a percentage of the value of the security. Commissions vary across markets and between brokers. (See also soft commission.) | N6 |
| Commission Recapture | Facility whereby a network of brokers agrees to rebate a portion of commissions to clients. This is usually managed by a third party that leverages collective clients’ buying power. | N6 |
| Commitment Fee | a fee paid to the arranger of a Bridge Facility and/ or senior secured Credit Facility for the commitment provided in the Commitment Letter. Note that the fee for a Bridge Facility is generally payable when the overall deal closes, whether or not the Bridge Loan is funded. The term also refers to a fee paid on the undrawn portion of a committed Revolver as compensation to the Revolver Lenders for keeping money available for borrowing. See Equity Commitment. | N1 |
| Commitment Letter | the letter by which financial institutions commit to provide loans. In the acquisition finance context, these loans generally consist of a Senior Secured Term Loan Facility and one or more Bridge Loan Facilities to “Bridge” any Notes offering expected as part of the permanent financing — meaning that the Bridge Loans are Committed Financing that will be available if the company is unable to issue the Notes successfully in time to fund the Acquisition Closing. The Commitment Letter consists of the actual text of the letter, along with annexes and exhibits that lay out the terms of the Facilities and the Conditions Precedent to funding. | N1 |
| Commitment Papers | a catch-all term referring to documents that together create Committed Financing, typically consisting of the Commitment Letter, Fee Letter and Engagement Letter (and the related annexes and exhibits) | N1 |
| Committed capital | the total amount that investors commit to the fund in order for it to make investments during a specific period. | N4 |
| Committed Financing | means that the providers of the financing and the recipient of the financing have signed Commitment Papers setting forth detailed terms for the provision of the financing. Committed Financing should not be confused with Funds Certain Financing or similar terms used in European M&A. Because the Commitment Papers establishing a Committed Financing are not the definitive loan documentation, but more in the nature of extensive Term Sheets, enforceability of Committed Financing is not as certain as enforceability of definitive documentation. | N1 |
| Committee on Foreign Investment in the United States (CFIUS) | an inter-departmental committee of the US executive branch charged with reviewing the national security implications of foreign investments in US companies. CFIUS is chaired by the Secretary of the Treasury and includes representatives of 16 US Departments and Agencies, including Defense, State, Homeland Security and the Director of National Security. See also Foreign Investment Rules. | N1 |
| Commodity | Any raw material — examples include oil, gold and cattle. | N6 |
| Common Investment Fund (CIF) | Pool of assets from more than one entity invested under one investment vehicle. | N6 |
| Common shares outstanding | The number of common shares of stock outstanding at the end of the year, including stock held by the company in its treasury. | N3 |
| Common Stock | the equity slice of the capitalization that sits at the bottom of the Capital Structure. Holders of Common Stock receive no interest payments, no principal payments and no Covenants. In most jurisdictions, the only protections for Common Stock holders are the Fiduciary Duties owed to them by the Board of Directors. By contrast, no Fiduciary Duty is owed to the creditors of a solvent company. The creditors’ rights are contractual. Whether holders of Preferred Stock are owed a Fiduciary Duty is more complicated because of the nature of Preferred Stock, which often has attributes of Common Stock (particularly the right to vote and subordination to creditors) but also the attributes of debt (such as a preferred right to dividends, which are often fixed in amount, and extensive contract-like provisions regarding the Preferred Stock’s rights vis-à-vis the Common Stock). To be safe, you should assume that a company’s Board of Directors does not owe its preferred stockholders Fiduciary Duties. Also called Ordinary Shares in many jurisdictions. | N1 |
| Common stock | A security representing a share of ownership in a corporation | N3 |
| Common Stock | US name for ordinary shares. | N6 |
| CompAcq | see Comparable Acquisition Analysis | N1 |
| Companies Act | 1. (UK) the UK Companies Act 2006, the principal piece of legislation governing UK Public Companies and Private Companies 2. (SGP) the Companies Act (Cap. 50) of Singapore, the principal piece of legislation governing Singapore companies 3. (UAE) UAE Federal Law No.8 of 1984 concerning commercial companies (as amended) | N1 |
| Companies House | the registry for companies incorporated in England and Wales. Its register includes the incorporation, re-registration and striking-off of companies, the registration of documents that must be filed under company, Insolvency and related legislation, and the provision of company information to the public. | N1 |
| Companies Ordinance | Companies Ordinance of Hong Kong, the principal piece of legislation governing Hong Kong companies. A new Companies Ordinance is expected to come into effect from 2014. | N1 |
| Companies Registry | the registry in Hong Kong responsible for administering the incorporation of Hong Kong companies and the registration of non-Hong Kong companies. The Companies Registry also administers the provisions of various company and Insolvency-related ordinances — including the Companies Ordinance — and provides public search facilities for company data and certain statutory registers. | N1 |
| Company Secretary | is the individual or entity responsible for a company’s compliance with statutory and regulatory requirements | N1 |
| Company Voluntary Arrangement | an Insolvency procedure under English Insolvency legislation. Company Voluntary Arrangement involves a Restructuring proposal that must be approved by more than 75 percent by value of the company’s unsecured creditors present and voting. Its use is limited as it cannot bind secured parties without their consent. | N1 |
| Company-Specific Risk | the risk that is unique to a specific investment in a business, in excess of the Equity Risk Premium, size risk, and/or country risk (e.g., significant customer concentration, business dependence on key person(s), or lack of product diversification). Also known as Unsystematic Risk. | N7 |
| Company-Specific Risk Premium | an adjustment to the cost of equity to account for Company- Specific Risk. Also known as alpha. | N7 |
| Comparable Acquisition Analysis | a financial and statistical analysis of measures of an actual or hypothetical purchase price for a company (such as relationship of the price to revenues, operating profits, EBIT, EBITDA and/or earnings, usually expressed in terms of percentages or Multiples) in comparison to the same measures for companies that have been sold and are identified as being comparable in certain ways. Sometimes referred to as CompAcq. | N1 |
| Comparable Company Analysis | a financial and statistical analysis of a specified company’s operating statistics (such as revenue, operating margin, EBIT, EBITDA and/or earnings, usually expressed in terms of Multiples) in comparison to the same statistics for other companies that are identified as comparable in certain ways. Sometimes referred to as CompCo. | N1 |
| CompCo | see Comparable Company Analysis | N1 |
| Competing Bid | an Acquisition Proposal made by a Competing Bidder | N1 |
| Competing Bidder | has several related usages. Competing Bidder is sometimes used to describe all participants in a formal or informal Auction intended to identify a Bidder that will be chosen by a Target Company to acquire the Target through an Acquisition Agreement. Competing Bidder is also used to describe any Bidder making an Unsolicited Bid following the execution of an Acquisition Agreement, otherwise known as an Interloper. | N1 |
| Competition and Markets Authority | in 2014 the activities and powers of the UK’s OFT and UK Competition Commission are due to be combined under the Competition and Markets Authority (CMA). The CMA will take control of all competition and antitrust matters, including cartel enforcement, Merger analysis and market studies which the OFT and UK Competition Commission currently control. See also Competition Commission. | N1 |
| Competition Commission | 1. (US) see Federal Trade Commission and see also Hart-Scott-Rodino Act
2. (UK) see Competition and Markets Authority and UK Competition Commission 3. (ESP) see Comisión Nacional de la Competencia (CNC) and European Commission 4 (FRA) see Autorité de la Concurrence and European Commission 5. (HKG) see Competition Commission of Hong Kong 6. (ITA) see Autorità Garante della Concorrenza e del Mercato 7. (RUS) see Federal Antimonopoly Service (FAS) 8. (SAU) see Council of Competition Protection 9. (SGP) see Competition Commission of Singapore |
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| Competition Commission of Hong Kong | the Competition Commission to be established under the Competition Ordinance of Hong Kong. The Competition Ordinance will introduce a cross-section competition law regime in Hong Kong and is scheduled to be implemented in phases, with the substantive provisions not expected to be in force before 2014. | N1 |
| Competition Commission of Singapore | Singapore’s competition authority, which administers and enforces the competition laws in Singapore. Often referred to as CCS. See Competition Commission. | N1 |
| Competitive bid | A competing offer for a company. This can be made by any person within a certain number of days of public announcement of the offer made by the acquirer. This can be made by public announcement and should be for the equal number of shares or more for which the first offer was made. | N3 |
| Completion | see Closing | N1 |
| Completion Accounts | see Closing Accounts | N1 |
| Completion accounts | when the agreement is finalised in an SPA (see Sale and Purchase Agreement), a future date on which a balance sheet is to be drawn up (the completion accounts) is agreed. These closing accounts will then form the basis for determining the net debt and the working capital that will be used for determining the final price according to the agreed price formula. | N5 |
| Completion Date | see Closing Date | N1 |
| Complex Capital Structure | a Capital Structure that includes debt and equity securities with different economic and control rights. Contrast with Simple Capital Structure. | N7 |
| Compliance | Compliance refers to the legally and ethically correct conduct of companies, including management and employees. This was originally mostly a concern for listed companies, but is becoming increasingly important for SMEs. The purpose of corporate compliance programmes is to ensure that breaches of relevant regulations do not occur, and that if they do, management is informed quickly and comprehensively. Compliance programmes to prevent corruption and violations of competition law are especially important. There is no “one-size-fits-all” approach to compliance. Setting up and implementing a compliance programme should always be based on a company’s specific needs (unless special statutory provisions apply). These needs can differ greatly, depending on the company’s size, organisational form and sector. The management teams at both company and group level may be exposed to significant liability risk if they fail to establish a compliance policy. | N2 |
| Comply-or-Explain Procedure | Refers to the recommendations in the DCGK (see also section 161 of the German Stock Corporation Act (AktG)); a company can choose not to comply with these recommendations, but must make a corresponding disclosure every year. | N2 |
| Composite Document | the one document that comprises the Offer Document and the Offeree Board Circular | N1 |
| Compound Interest | Method of accumulating interest, where interest is paid on both the initial investment and the interest accruing during the period. | N6 |
| Compound Option | Option where the underlying asset is itself an option. | N6 |
| Compound Rate of Return | Total return calculated by multiplying returns for different periods. | N6 |
| Compressed Valuations | Market conditions in which relative pricing differences between the highest- and lowest-priced segments of a stock market are smaller than the long-term average. Typically favours growth investors, since faster-growing stocks will be trading at a lower-than-normal premium to the market. Value investors, on the other hand, will struggle to find stocks trading at deep discounts to the market. | N6 |
| Compulsory Liquidation | see Compulsory Winding Up | N1 |
| Compulsory Winding Up | the Winding Up of a company in Hong Kong following an order made by the Hong Kong courts based on the grounds set out in the Companies Ordinance. Although Compulsory Winding Up is not restricted to situations where a company is insolvent, in practice the majority of Compulsory Winding Up petitions are filed by creditors on the grounds that the company is unable to pay its debts. Also known as Compulsory Liquidation. | N1 |
| Con Edison Provisions | a provision in an Acquisition Agreement specifying that, in the event a Buyer breaches the agreement, the measure of damages to a Target Company is the loss suffered by the Target’s shareholders, measured by the difference in trading market prices of the Stock either: before and after the transaction is first announced; or before and after the wrongful termination of the transaction by reason of the Buyer’s breach of contract. The term is derived from Consolidated Edison v. Northeast Utilities, 426 F.3d 524 (2d Cir. 2005), in which the court held that a Buyer of a company cannot be held liable for the Target stockholders’ lost Merger premium if the Target Company shareholders did not sign the Merger Agreement and/or were not intended third-party beneficiaries to the contract. | N1 |
| Concentrated Portfolio | Portfolio with a small number of securities. This relative lack of diversification aims to achieve higher performance than the benchmark but with a commensurate increase in risk. | N6 |
| Concert Party | a person or Group of persons acting together to achieve a common or shared goal. Concert Party is used, and defined, in the City Code, the HK Takeovers Code, and by other European Public Company Takeover regulations in relation to those persons who actively cooperate to achieve control of a Target Company. See Acting In Concert. 1. (ESP) a person or Group of persons acting together to achieve a common or shared goal as per Royal Decree 1066/2007, of July 27 on public Takeover Bids and by other European Public Company Takeover regulations in relation to those persons who actively cooperate to achieve control of a Target Company. See Acting In Concert. | N1 |
| Concordato Preventivo | pre-bankruptcy arrangement with creditors pursuant to Article 160 and sub. of the Italian bankruptcy law. Shall be based on a plan which may provide for: (i) the Restructuring of the entity’s indebtedness and the settlement of the creditors’ claims; (ii) the sale of the business assets; (iii) the assignment of creditors to different classes, based on their claims; and (iv) a diversified treatment of creditors assigned to different classes. The arrangement proposal is subject to homologation, or official approval, by the bankruptcy court. A stay on creditors’ actions is provided from the registration of the arrangement proposal in the Company Register up to its homologation by the bankruptcy court. | N1 |
| Concurso de Acreedores | refers to the creditors’ meeting in a Spanish Insolvency proceeding regulated under Law 22/2003, of July 9, which can lead to either a Liquidation or Restructuring of the company. Either the debtor or its creditors can apply for a Concurso de Acreedores. | N1 |
| Concurso de Acreedores | refers to the creditors’ meeting in a Spanish Insolvency proceeding regulated under Law 22/2003, of July 9, which can lead to either a Liquidation or Restructuring of the company. Either the debtor or its creditors can apply for a Concurso de Acreedores. | N1 |
| Condition Precedent | a condition which must be satisfied on, or prior to, the Closing of the relevant transaction. Also called a Closing Condition. | N1 |
| Condition precedent | A condition necessary to be fulfilled for concluding the Sale and Purchase agreement. Anticompetition approval is such a condition precedent. | N3 |
| Conditionality | means the degree of conditions (e.g., Material Adverse Change, Due Diligence Condition, Financing Condition, Minimum Condition) that must be met in order for a deal to close pursuant to an Acquisition Agreement. Greater Conditionality reduces a Buyer’s risk and lessens Deal Certainty for a Seller. | N1 |
| Conditions Precedent (CP) | Often used synonymously with Closing Conditions in sale and purchase agreements; in some cases, the term “condition precedent” is only used for genuine conditions precedent (within the meaning of section 158 (1) of the German Civil Code (BGB)) where the corresponding effect occurs when the condition is fulfilled, without any further legal act being required. By contrast, in some cases the fulfilment of a closing condition only gives rise to a requirement under the law of obligations for the relevant party to honour its commitments. | N2 |
| Conduct of Business | How management conducts the business of a company; refers in particular to the way a business is run during a specific period, e.g. between Signing and Closing. | N2 |
| Conduit | Special Purpose Vehicle that acquires receivables to apply them for an asset securitization and/or sales of receivables on the capital market | N1 |
| Conduit | Financing technique based on ABS structures; there is no generally accepted definition. | N2 |
| Conference Call | Telephone call involving more than two people; sometimes shortened to telco, telcon, conf call or CC. | N2 |
| Confi | shorthand for a Confidentiality Agreement. See also NDA. | N1 |
| Confidential Information Memorandum | refers to the marketing document used to give potential Bidders an initial understanding of the Target Company. Often referred to as the CIM for short, or also Banker Book, Offering Statement, Information Memo, IM or Offering Memorandum. | N1 |
| Confidentiality | Undertaking Unilateral undertaking to treat information received from the other party as confidential. | N2 |
| Confidentiality Agreement | another name for a Non-Disclosure Agreement | N1 |
| Confidentiality Agreement (CA) | Agreement to maintain confidentiality or secrecy, which imposes obligations on both parties (see NDA). | N2 |
| Confidentiality Undertaking | unilateral commitment of one party to treat information confidentially and earmark what the other party disclosed to the first party under a Non-Disclosure Agreement | N1 |
| Confidentiality Undertaking | See Non-Disclosure agreement (NDA). | N5 |
| Confirmation of Financing | Confirmation from a bank that a specified amount is available. | N2 |
| Confirmatory Due Diligence | the Buyers’ final phase of the Due Diligence during which the Buyer confirms whether all issues identified in the Due Diligence are properly reflected in the Acquisition Agreement | N1 |
| Confirmatory Due Diligence | Final phase of Due Diligence, usually carried out just prior to Signing. It provides an opportunity to resolve the remaining outstanding issues or ones that have newly arisen, or to verify assumptions. | N2 |
| Conformed Copy | the name given to a copy of an executed document in which all signatures are recorded in typed form. A Conformed Copy will also be periodically updated to include all amendments post execution. | N1 |
| Conglomerate | “A conglomerate is a corporation that is made up of a number of different, seemingly unrelated businesses. In a conglomerate, one company owns a controlling stake in a number of smaller companies, which conduct business separately. Each of a conglomerate’s subsidiary businesses runs independently of the other business divisions, but the subsidiaries’ management reports to senior management at the parent company.” | N3 |
| Conglomerate merger | An amalgamation of companies in two or more different industries. | N3 |
| Connected Adviser | a Financial Advisor or bank in the context of a UK public Takeover with reporting obligations under the City Code as a result of its advisory relationship with either the Bidder or Target Company. A similar concept exists under the HK Takeovers Code for “Connected Discretionary Fund Managers,” “Principal Traders” and “Exempt Principal Traders.” | N1 |
| Consensus Fund | Form of passive management that aims to match closely the average return achieved by a specified group of actively managed portfolios. These funds usually operate by continually adjusting their assets to bring them into line with the average asset mix of the specified portfolios and then by investing, within each area, in securities that represent the market index. | N6 |
| Consent Solicitation | a solicitation of Written Consents from shareholders pursuant to a Charter provision permitting shareholders to act by Written Consent in lieu of a Shareholders’ Meeting. The term Consent Solicitation is also used to describe the process by which a requisite number of debt holders agree to a change in the governing instrument for the debt. | N1 |
| Consideration | the proceeds received on the disposal of an asset. Can be made up of more than just cash, i.e. shares or property. | N5 |
| Consideration | Something of value, such as money or personal services, given by one party to another in exchange for an act or promise. | N6 |
| Consob | shorthand for Commissione Nazionale per le Società e la Borsa, the Italian Securities and Exchange Commission (SEC) | N1 |
| Consolidated Financial Act | Italian Legislative Decree no. 58 of 1998 | N1 |
| Consolidated Financial Statements / Consolidated Financial Accounts | A company’s consolidated financial statements. | N2 |
| Consolidation | The fusion of two companies in which both the companies lose their identity and form a new company. Shareholders get the shares of the new company. | N3 |
| Consolidation | Process where a company increases the nominal value of its shares, and decreases the number of shares in issue by combining multiple denominations. For example, consolidating five shares of 5p each into one share of 25p. | N6 |
| Consortium | Association of several companies formed to implement a joint project; the collaboration ends once the objective has been reached, or is replaced by a longer-term agreement (e.g. a Joint Venture). | N2 |
| Constituent Documents | a company’s Articles of Association, Articles of Incorporation, Certificate of Incorporation, Charter, Bylaws, etc. or other analogous documents in other jurisdictions. See Charter and Bylaws. | N1 |
| Constitution (UAE) | the constitution of the UAE made permanent pursuant to Constitutional Amendment No.1 of 1996. The Constitution is the legal framework for the federation and the basis of all legislation promulgated at both a federal and Emirate level. | N1 |
| Constitutional Documents | see Constituent Documents | N1 |
| Constraints | Limits or restrictions imposed on an investment manager in relation to particular shares, sectors or markets for various reasons, for example, risk reduction or ethical considerations. | N6 |
| Consumer Price Index (CPI) | US measure of price inflation. | N6 |
| Consumer Prices Index (CPI) | Measure of price inflation in the UK. Differs from the RPI in the particular households it represents, the range of goods and services included, and the way the index is constructed. Compiled by the Office for National Statistics and used for the UK government’s inflation target. The UK government’s name for the Harmonised Index of Consumer Prices (HICP), a standardised European-wide measure of inflation. (See also Retail Prices Index.) | N6 |
| Contango | In a forward contract, the situation where the price of a commodity for future delivery exceeds the spot price of the commodity. The difference is considered to indicate the cost of holding the physical asset for future delivery. (See also backwardation.) | N6 |
| Contingent Consideration | consideration payable in respect of a transaction which only applies if certain Triggers are met | N1 |
| Contingent Liability | a potential obligation that may be incurred depending on the outcome of a future event. A contingent liability is one where the outcome of an existing situation is uncertain, and this uncertainty will be resolved by a future event. | N5 |
| Contingent Value Right | a provision in an Acquisition Agreement or a Security issued to Target Company shareholders pursuant to an Acquisition Agreement, pursuant to which Target shareholders will receive additional Merger Consideration if specified contingencies occur. Contingent Value Rights are frequently discussed, but infrequently used, because of the difficulties of negotiating mutually acceptable measurements for realizing the contingency (e.g., reaching certain sales or earning goals). These difficulties are sometimes inherent in the nature of the contingency and are always controversial because of the Buyer’s ownership of the assets and business which gives rise to the contingency and the Buyer’s naturally strong interests in having a free hand to run the acquired business and reluctance to pay additional consideration. Also referred to as an Earn-Out or CVR. | N1 |
| Continuing operations | Term used in an income statement to denote recurring income as opposed to income generated by sales of assets or discontinued operations. | N3 |
| Continuity of business enterprise doctrine | A taxation principle applicable to corporate mergers and acquisitions. The doctrine holds that, in order to qualify as a tax-free reorganization, the acquiring entity must either continue the target company’s historic business or should use a substantial portion of the target’s business assets in a business. | N3 |
| Continuity of interest doctrine (cid) | A doctrine which stipulates that a corporate acquisition can be done on a tax-free basis if the shareholders of the acquired company hold an equity stake in the acquiring company. The continuity of interest doctrine was intended to ensure that a stockholder in an acquired company, who continued to hold an interest in the successor corporation or continuing entity created after the reorganization, would not be taxed. | N3 |
| Contract Note | Written record of an agreement to buy or sell securities. | N6 |
| Contracts (Rights of Third Parties) Act 1999 | the Act that allows a third party the right to enforce a term or terms of a contract (to which it is not party) | N1 |
| Contractual Trust Arrangement (CTA) | Structure used for removing pension commitments or pension provisions from the balance sheet (CTA). | N2 |
| Contrarian | Investor who takes a position in the market contrary to that of the majority. | N6 |
| Contribution Analysis | a financial analysis in the context of an Acquisition that compares the absolute (in terms of dollars) or relative (in terms of percentage) actual or projected contribution of each party to historical or projected Pro Forma combined data for the transaction (e.g., the relative contribution of the parties to Pro Forma combined revenues, Pro Forma combined EBIT or Pro Forma combined net earnings) | N1 |
| Contributory Asset Charge | an economic charge for Contributory Assets applied in the Multi- Period Excess Earnings Method. See also Contributory Assets, Excess Earnings Method, and Multi-Period Excess Earnings Method. | N7 |
| Contributory Assets | assets (e.g., working capital, machinery and equipment, trademarks, assembled workforce) that are used in conjunction with the subject Intangible Asset in the realization of prospective cash flows associated with the Intangible Asset being valued. See also Multi-Period Excess Earnings Method and Contributory Asset Charge. | N7 |
| Control | a level of ownership having sufficient rights (e.g., voting) to direct the management, policies, and disposition of a business. | N7 |
| Control Premium | an amount or percentage by which the pro rata value of a Controlling Interest exceeds the pro rata value of a Noncontrolling Interest in a business, to reflect the anticipated economic benefits of Control. Also known as acquisition premium. | N7 |
| Controlled Company | a Public Company, in which the Majority Voting Securities is owned by an individual, a Group or another company. Controlled Companies are exempt from some of the stock exchange Independent Director requirements (other than those applicable to the audit committee). See also Independent Director. | N1 |
| Controlled Foreign Company | see Controlled Foreign Corporation | N1 |
| Controlled Foreign Corporation | 1. (US) a foreign corporation if more than 50 percent of its total voting power or value is actually or constructively owned by “US shareholders” on any day of the corporation’s tax year. A “US shareholder” is a US citizen, resident, corporation, Partnership, estate, or trust actually or constructively owning 10 percent or more of the corporation’s voting power. See CFC. 2. (UK) Controlled Foreign Company rules apply to subsidiaries of Parent entities located in certain jurisdictions, typically when the subsidiary is located in a ‘low tax’ or ‘no tax’ jurisdiction. The term is principally used in reference to the UK, although other jurisdictions (in Europe and elsewhere) have similar or corresponding rules. Typically, part or all of the profits/unremitted profits of the CFC are attributed to the relevant Parent for tax purposes. | N1 |
| Controlling Interest | an ownership interest in a business that conveys the economic benefits of Control to the holder(s) of such interest. | N7 |
| Controlling Shareholder | a shareholder or Group of shareholders who own a block of voting Securities of a Target Company; the exact amount may vary depending on the Capital Structure of the company and the jurisdiction, but is often at least 30 percent or more of a Target Company’s voting Securities. A Controlling Shareholder can block the approval of a Business Combination, so Buyers will often negotiate directly with them to enter into a Support Agreement. 1. (FRA) under French law, the term Controlling Shareholder usually relates to a person or a group of persons Acting in Concert, who (a) holds directly or indirectly the majority of voting rights, (b) in fact exercises control over a company through the voting rights, or (c) has the capacity to appoint or revoke the company’s legal representatives 2. (HKG) under the Hong Kong Stock Exchange Listing Rules, a Controlling Shareholder is a person or group of persons who: (a) are entitled to or control the exercise of 30 percent or more of the voting power in a company; or (b) are in a position to control the composition of a majority of the board of directors of the company 3. (SGP) under the Singapore Listing Manual, a Controlling Shareholder is a person who: (a) holds directly or indirectly 15 percent or more of the total number of issued Shares, excluding Treasury Shares, in the company, unless the Singapore Exchange determines otherwise; or (b) in fact exercises control over a company | N1 |
| Conventional Bond | Bond where the coupon and principal payments are fixed. | N6 |
| Conversion Price | the price at which a given Convertible Security can be converted to Stock. The Conversion Price is set on the pricing date at a premium above the current market price of the underlying Stock on that date. | N1 |
| Conversion price | The price paid for a common stock that is obtained by converting either convertible bonds or preferred convertible stock. | N3 |
| Conversion Rate | the rate at which a Convertible Bond may be converted into Stock, typically expressed as a Share number per $/€1,000 in principal amount of Bonds. This is really just another way of expressing the Conversion Price. | N1 |
| Convertible | a Security or contractual right of repayment (such as a Bond, loan or other debt Instrument) convertible into another Security, typically Ordinary Shares | N1 |
| Convertible Bond | Bond which, under certain conditions, the owner can opt to convert into another security, normally an ordinary share. | N6 |
| Convertible Preference Shares | see Convertible Preferred Stock | N1 |
| Convertible Preferred Equity Certificate | PECs are a form of Preferred Share issued by a Luxembourgian Company and which can be converted into Equity Interests | N1 |
| Convertible Preferred Stock | Preferred Stock, Preferred Shares or Preference Shares which entitle the shareholder to convert such into Common Stock/Ordinary Shares. See also Convertible Preference Shares. 1. (FRA) under French law, Preferred Shares can always be converted into Ordinary Shares by a decision of the shareholders, although such conversion is not in the Bylaws or in the terms and conditions of the Preferred Shares | N1 |
| Converts | shorthand for Convertible Bonds | N1 |
| Convexity | Measure of the way a bond’s duration changes in response to a change in interest rates. Positive convexity is evidenced when the proportional change in a bond’s duration is greater than the proportional decrease in interest rates, and vice versa for negative duration. | N6 |
| Core Holding | Security or asset which is considered to be a long-term holding in a portfolio and, as such, is less likely to be actively traded. They are often high-quality securities with a history of fairly steady performance. | N6 |
| Core/Satellite | Generally, the partitioning of a plan’s assets between a core portfolio of lower risk holdings (which may be managed passively) and one or more actively managed (satellite) portfolios. | N6 |
| Corp Dev | shorthand for Corporate Development | N1 |
| Corporate Benefit | a requirement, under certain legal regimes in Europe or elsewhere, that a company must derive an actual benefit, consideration or advantage from any transaction in order for the transaction to be lawfully entered into without its officers risking personal liability or a prison sentence or (worse) voiding the transaction. This is particularly the case for decisions involving the granting of guarantees or Security interests with respect to the liability of a third party. The extent to which a company can take into account the benefits derived by other members of its group when assessing the existence of Corporate Benefit differs between jurisdictions. | N1 |
| Corporate Bond | Bond issued by a corporation (as opposed to a government) promising regular payments on a specified date or range of dates and a final capital payment at redemption. | N6 |
| Corporate Development | in the M&A context, refers to employees of entities (usually corporates) who review strategic options and help to execute Business Combinations. See also Corp Dev. | N1 |
| Corporate Governance | Totality of the external and internal management and control mechanisms in a company. | N2 |
| Corporate Governance | Means by which shareholders govern the management of a company through the use of voting powers. Also used more generally with regard to the systems by which boards of directors are composed, and companies are directed and controlled. | N6 |
| Corporate Governance Activist | a name for a person or entity that frequently advocates changes in corporate governance policies and procedures that have, or are intended to have, the effect of increasing shareholders’ role in corporate governance | N1 |
| Corporate Governance Code | 1 (DEU) Corporate Governance Code, the Government Commission appointed by the Justice Minister in September 2001 adopted the German Corporate Governance Code on February 26, 2002. Through the declaration of conformity pursuant to Article 161 of the Stock Corporation Act (Aktiengesetz) as amended by the Transparency and Disclosure Law, entered into force on July 26, 2002, the Code has a legal basis. 2. (ESP) Code of Corporate Governance of the Listed Companies (Código Unificado de buen gobierno de las sociedades cotizadas). Corporate Governance and the rules of this Code are not compulsory for Spanish Listed Companies and follow the rule “comply or explain.” 3. (FRA) codes of Corporate Governance and good conduct have been issued in France by associations of professionals (AFEP-MEDEF). Corporate Governance and the rules of this Code are not compulsory for French Listed Companies and follow the rule “comply or explain.” 4. (HKG) Corporate Governance Code issued by the Hong Kong Stock Exchange and contained in Appendix 14 to the Listing Rules. Compliance with the Code is not mandatory, but Listed Companies are required under the Listing Rules to disclose their corporate governance practices and give explanations for deviations from the Corporate Governance Code in their annual reports. 5. (SAU) Corporate Governance Regulations in the Kingdom of Saudi Arabia issued by the Board of Capital Market Authority pursuant to Resolution No. 1/212/2006 dated 21/10/1427H (corresponding to 12/11/2006) (as amended) 6. (SGP) Code of Corporate Governance, issued by the Monetary Authority of Singapore. Compliance with the Code of Corporate Governance is not mandatory, but Listed Companies are required under the Listing Rules to disclose their corporate governance practices and give explanations for deviations from the Code in their annual reports. |
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| Corporate Governance Expert (Specialist) | a name for persons who claim expertise in corporate governance and who typically are proponents of Corporate Governance Activism | N1 |
| Corporate Guarantee | Guarantee issued by a parent company or other affiliated company in relation to the obligations of another group company (often a Special Purpose Vehicle). | N2 |
| Corporate Social Responsibility | Initiative to assess and take responsibility for a company’s effects on the environment and impact on social welfare. This goes beyond the environmental measures required by law or by environmental protection groups. | N6 |
| Corporation Tax | A banded tax on the profits of a company. | N5 |
| Correlation Coefficient | Measure of the interdependence of two or more variables, for example, the returns recorded by two stock markets. A correlation coefficient can range from -1 (inverse relationship) to +1 (perfect correlation — change in variables will be identical). A correlation coefficient of 0 indicates the absence of a relationship between the variables. | N6 |
| Co-Sale | another name given to a Tag-Along right | N1 |
| Cost Approach | a general manner of estimating the value of an asset, investment, or (in limited circumstances) a business using one or more methods that reflect the economic principle that a buyer will generally pay no more for an asset than the cost to obtain another asset of equal utility, whether by purchase or by construction. The approach considers the current replacement or reproduction cost and the physical deterioration and all other relevant forms of obsolescence. See also Asset Approach. | N7 |
| Cost Coverage | the affirmation of a transaction party to compensate the costs of another transaction party in whole or in part | N1 |
| Cost Coverage | Commitment to reimburse the expenses incurred by the other party in connection with the transaction; often combined with an upper limit (Cap). | N2 |
| Cost of Capital | the theoretical weighted economic cost to an entity of raising new capital | N1 |
| Cost of Capital | the expected rate of return that the market requires in order to attract funds to a particular investment considering the risk of the investment. See also Weighted Average Cost of Capital. | N7 |
| Cost of Debt | the theoretical economic cost to an entity (often expressed as a percentage of principal amount) of raising new debt capital | N1 |
| Cost of debt | the cost of financing debt after deduction of the tax benefit owing to the tax deductibility of interest amounts. | N4 |
| Cost of Equity | the theoretical economic cost to any entity (often expressed as a percentage of its notional value as set forth on the entity’s Balance Sheet) of raising new equity capital | N1 |
| Cost of equity | An investor will require a return that is higher than the return on a risk-free investment. He will therefore require a premium to compensate for the general risk of his investment plus a premium for other specific risks associated with the investment. The formula is as follows: CoE = RF + Beta x MRP + Alpha. | N3 |
| Cost of Fund | what it costs a Lender to borrow funds to provide to a Borrower. In Credit Facilities, a Lender’s Cost of Funds is intended to be passed on to the Borrower and, on the assumption that Lenders raise their funds in the relevant interbank market, is represented by EURIBOR/ LIBOR. EURIBOR/LIBOR is usually considered a fair reflection of a Lender’s Cost of Funds — but not always, in particular when markets are volatile and Liquidity between financial institutions is scarce (although Lenders are often reluctant to admit this). See Market Disruption. | N1 |
| Cost Savings Method | a method within the Income Approach whereby the value of an Intangible Asset is estimated based on an expected future benefit stream of the asset in terms of the future expenses that are avoided (or reduced) by owning the asset. | N7 |
| CoTrans/Comparable Transaction | if a comparable company has recently been sold, we can take the transaction price (if known) as a measure of the value. | N4 |
| Council of Competition Protection | the Council of Competition Protection as constituted under the Competition Law in the Kingdom of Saudi Arabia issued by Royal Decree No. M/25 dated 4/5/1425H. See Competition Commission. | N1 |
| Council of Ministers of Qatarl | the cabinet of Qatar, chaired by the Prime Minister of Qatar, is the supreme executive authority in Qatar | N1 |
| Counterparts | under many legal systems not all signatories to a document need to sign the same hardcopy document; each separate hardcopy document that is signed is known as a Counterpart and together they create a binding agreement | N1 |
| Counterparty Risk | Risk that the other party in a financial arrangement defaults on its contractual obligations. For example, in a swap, where interest rates increase, the fixed rate payer in the agreement is at risk that the counterparty (the floating rate payer) fails to deliver the increased interest payment. | N6 |
| Country Allocation | Integral part of the asset allocation process that selects desired weightings in particular geographic regions. | N6 |
| Country Risk | Risk attached to investing in a given country that relates to the country, for example, political and economic risks rather than other factors more specific to the investment in question. | N6 |
| Coupon | the contractual interest rate stated on a Bond when the Bond is issued. Note the Coupon is not the same as the yield. | N1 |
| Coupon | Interest rate payment (usually six-monthly) on a bond. | N6 |
| Court of First Instance | the court in which a complaint in a litigation is first lodged | N1 |
| Court of Last Resort | the highest court to which a given litigation may be appealed | N1 |
| Covenant | legalese for an agreement to do something (Affirmative Covenant), not to do something (Negative Covenant) or to maintain something (Maintenance Covenants). See also Interim Operating Covenants. | N1 |
| Covenant | a legal term promising to do, or not to do, a given thing. | N5 |
| Covenant | Obligation in the sense of a side agreement in a contract; in loan agreements, breach of a covenant by the borrower often entitles the lender to terminate the loan agreement. | N2 |
| Covenant (bond) | Provisions within a borrowing agreement describing the obligations of a bond issuer to protect the interests of the bondholders. Affirmative covenants require the borrower to take certain actions (e.g. retain a certain debt to equity ratio). Negative covenants prohibit the borrower from certain actions (e.g. pay out too high dividends). The breach of covenant might cause the default of the bond. | N6 |
| Covenant (pension fund) | Ability and willingness of the sponsor to make good any shortfall in a scheme’s funding. A strong covenant reflects a financially strong sponsoring company, which can be relied upon to rectify funding shortfalls in the pension fund should they emerge. This imparts a degree of investment flexibility and freedom lacking for a pension fund with a weaker covenant from its plan sponsor. | N6 |
| Covenant (property) | Commonly used in property investment to refer to the quality of a tenant. A tenant with a good covenant is of high quality and unlikely to break the terms of the agreement, for example, the government or a government agency. The covenant also sets out the obligations of tenant and landlord. | N6 |
| Covenants | Provisions in the legal agreements on loans, bonds, or lines of credit. Usually written by the lender to protect its position as a creditor of the borrowers. | N3 |
| Covenants | the parameters used by banks to assess whether repayment is threatened. | N4 |
| Coverage | Proportion of a portfolio’s benchmark that is actually held in the portfolio, measured either by market capitalisation or number of stocks. Also refers to the researching of a particular stock by an analyst, who will issue reports and recommendations to fund managers. | N6 |
| Covered Option | Option where the writer owns the underlying asset (of a call option) or holds cash of equal value to the strike value of the underlying asset (for a call option). | N6 |
| CP | see Condition Precedent | N1 |
| CP | Conditions Precedent. | N2 |
| CP/Condition Precedent | a CP is a condition for concluding the agreement. Legally speaking, this can have the character of both a condition subsequent and a condition precedent. A typical example of a CP is obtaining approval for the acquisition from the competition authorities. | N4 |
| CPA | Certified Public Accountant. | N2 |
| CPECs | acronym for Convertible Preferred Equity Certificates | N1 |
| CPI | See Consumer Price Index (US measure of price inflation) or Consumer Prices Index (UK measure). | N6 |
| Cram-Down | occurs in a Cash Election or Stock Election Acquisition, where at least one type of consideration is limited in amount. If the limited form of consideration is Oversubscribed, the shareholders electing the Oversubscribed consideration will receive the other consideration instead — hence the Cram-Down. Also referred to as a Single Cram-Down. See Double Cram-Down for a related structure involving shareholder elections where both types of consideration are limited in amount. 1. (US) also, the confirmation of a plan of Reorganization by a Bankruptcy court, even though one or more classes of creditors or Equity Interest holders has objected to the plan. The confirmed plan will bind all classes of creditors and Equity Interest holders, even those who voted against the plan. Hence the descriptive phrase Cram-Down for what happens to dissenters. This is a key tool for debtors and a major reason that some companies restructure in Bankruptcy, rather than out of court. Governed by §1129(b) of the Bankruptcy Code. | N1 |
| Credit | Debt issued by non-government bodies. | N6 |
| Credit Crunch | Describes the global financial crisis of 2008/early 2009 which was driven by a chronic lack of liquidity (credit) in financial markets across the world. | N6 |
| Credit Default Swap | Contract between two parties who agree to exchange payments based on a contingency residing with a third party. Typically, the protection buyer will make periodic payments to the protection seller, who in turn agrees to make a contingent payment to the buyer upon the occurrence of a credit event on the third party’s asset (e.g. the third party defaulting on a loan repayment). | N6 |
| Credit Facility | a collective reference to loans and commitments from a Lender or group of Lenders. Examples of Credit Facilities include: Revolving Facilities, Term Loan Facilities, first lien Facilities, second lien Facilities and Bridge Facilities. | N1 |
| Credit Rating | Rating given by a credit-rating agency, based on its view of the financial strength of a borrower and the likelihood of default (i.e. inability to meet debt obligations). The highest rating is usually AAA, and the lowest is D. | N6 |
| Credit Risk | the risk that a counterparty will default on its contractual obligations as a result of its failure or impaired financial situation. While most commonly referred to in Lender/ Borrower circumstances, essentially every party to the deal weighs the Credit Risk when considering a variety of execution risks. | N1 |
| Credit Risk | Risk of suffering loss due to another party defaulting on its financial obligations. Also known as default risk. | N6 |
| Credit Spread | Difference in the yield available on a corporate bond compared to a government bond. Credit spreads will generally be higher for companies with lower credit ratings. (See also swap spread.) | N6 |
| Credit Support Annex (CSA) | Provides credit protection by setting forth the rules governing the mutual posting of collateral. CSAs are used in documenting collateral arrangements between two parties that trade privately negotiated (over-the-counter) derivative securities. A clean CSA is one that permits only GBP cash and UK gilts to be posted as collateral in GBP-denominated transactions. | N6 |
| Credit Support Deed (CSD) | Annex to an ISDA Master Agreement, drawn up under English law, which allows parties to the agreement to mitigate their credit risk by requiring the out-of-themoney party to post collateral (usually cash, government securities or highly rated bonds) corresponding to the amount which would be payable by that party were all the outstanding transactions under the relevant ISDA Master Agreement terminated. The equivalent agreement under New York law is known as the Credit Support Annex (CSA). | N6 |
| Creditors | Parties (e.g. person, organisation, company, or government) that a business owes money to. | N5 |
| Creditors Voluntary Liquidation | a type of English or Hong Kong Liquidation proceeding approved by a company’s creditors. An alternative form of voluntary liquidation where a Members Voluntary Liquidation cannot apply because the company is not solvent. | N1 |
| Creeper | the concept under the HK Takeovers Code which allows a person who holds between 30 percent to 50 percent of a Public Company’s voting rights to acquire additional voting rights up to a maximum percentage increase (currently 2 percent) during a prescribed period of time without triggering an obligation to make a Mandatory Offer | N1 |
| Creeping | Takeover Gradual acquisition of a substantial stake in a listed company while avoiding notification requirements under the German Securities Trading Act (WpHG) and obligations under the German Securities Acquisition and Takeover Act (WpÜG); a notable example was the takeover of Continental AG by the Schaeffler Group (see also Stakebuilding). | N2 |
| Creeping Tender Offer | a colloquial term for an Acquisition of a large block of a Public Company’s Stock (typically a controlling block) through Open Market Accumulations and/or private purchases. The term derives from the concept that the purchases of Stock achieve the ends of a conventional Partial Offer, but through a series of market purchases over time, rather than in a single transaction. 1. (US) because Tender Offers are regulated under the Williams Act and market purchases are not, a fair amount of litigation (and commentary from the practicing bar and academics) surrounds whether or not a Creeping Tender Offer constitutes a Tender Offer within the meaning of the Williams Act and is thus illegal. See Wellman v. Dickinson, 475 F. Supp. 783 (S.D.N.Y. 1979). 2. (FRA) under French law such market purchases are limited by the obligation to notify the crossing of certain legal and statutory Thresholds to the AMF and the Issuer | N1 |
| CREST | the central Depository for holding Uncertificated UK or Irish Securities. CREST is also an electronic Share trading settlement system used in the UK and Ireland. See Depository. | N1 |
| CREST | Real-time settlement system for trading of UK and international shares, UK government and other corporate securities. The system is operated by CRESTCo. | N6 |
| CRO | the QFC Companies Registration Office is the QFC companies’ registrar operating within the QFC responsible for the day-to-day Administration of QFC companies’ administrative affairs. | N1 |
| Cross Border Merger | a transnational Merger of companies 1. (UK) the term can also mean a transaction whereby one company merges into the other by operation of law pursuant to the European Directive 2005/56/EC on Cross-Border Mergers. In many jurisdictions the legislation implementing the directive has permitted true “Mergers” for the first time under relevant domestic legislation (for example the UK) and provides a new way for UK public and private limited companies to make or receive a transfer of assets and liabilities to or from companies in other European/ EEA jurisdictions. 2. (ITA) the above mentioned European Directive was implemented in Italy by Legislative Decree no. 108 of 2008 | N1 |
| Cross Border Rules | SEC promulgated rules that regulate aspects of Tender Offers and Exchange Offers for foreign companies that are subject to the 1934 Act (and, in the case of Exchange Offers, the 1933 Act), because a sufficient number of shareholders of the Target Company are US residents or because the Target Company’s Stock is registered under the 1934 Act | N1 |
| Cross-border Merger | Merger of companies across national boundaries. | N2 |
| Crossing | Transactions undertaken directly with other investors executing the opposite trade, to minimise spread costs and market impact. Internal crossing opportunities are those where the investors are simultaneously trading with a transition management firm. External crossing involves actively seeking out market participants who are executing trades in the opposite direction. | N6 |
| Crossing Up | see Gross Up | N1 |
| Crowdfunding | “Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other methods. Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system. The crowdfunding model is based on three types of actors: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organization (the “”platform””) that brings the parties together to launch the idea. In 2013, the crowdfunding industry raised over $5.1 billion worldwide” | N3 |
| Crowdfunding | the funding of a project or company by a group of individuals rather than professional institutions, in which the internet is used as the main means of communication. On some crowd funding websites, the invested money does not go directly into the project; the entrepreneur only receives the money when 100% (or more) of the foreseen investment has been placed. If this 100% is not achieved, the investors get their money back. | N4 |
| Crowdfunding | the funding of a project or company by a group of individuals rather than professional institutions, in which the internet is used as the main means of communication. | N5 |
| Crown Jewel | a name for a Target Company’s business that is economically important or crucial to the Target Company’s profitability and/or prospects | N1 |
| Crown jewels | Precious assets or business lines in a company. These attract the raider to bid for the company’s control, or they may be sold by the parent to raise cash. Instead of selling the assets, the company may also lease them or mortgage them so that the attraction of free assets to the buyer is reduced. | N3 |
| Crown Jewels Defence | Defence mechanism against a Hostile Takeover; to make the Target as unattractive as possible to the attacker, its most valuable Assets or equity interests are sold to third parties. Adopting this strategy may considerably weaken the target. | N2 |
| Crystallization | the process whereby a Floating Charge becomes a Fixed Charge over the assets to which it relates. Crystallization can take place as a result of a notice (e.g., after an Event of Default) or, in some circumstances, may occur automatically on an Event of Default or some other agreed event. | N1 |
| CTA | Contractual Trust Arrangement. | N2 |
| CTC | the Central Tenders Committee of the Ministry of Economy and Finance is responsible for and processes public sector tenders in Qatar | N1 |
| Cum Dividend | Security where the purchaser is entitled to receive the next coupon or dividend. The opposite of ex-dividend. | N6 |
| Cumulative Voting | a relatively uncommon structure for shareholder voting for members of the Board of Directors. Cumulative voting entitles each shareholder to the number of votes equal to the total number of directors to be elected, and the holder of the Share has the right to allocate as many of its votes as it wishes for one, some or all candidates. Under this system, an organized minority of shareholders could have the opportunity to ensure election of one or several selected nominees by cumulating its aggregate votes for the chosen director(s). | N1 |
| Currency Hedging | Strategy designed to reduce or eliminate exchange rate risk in a portfolio of non-domestic assets through the use of currency futures/forwards or by the purchase, sale or borrowing of the exposed currency. | N6 |
| Currency Overlay | Investment management technique aimed solely at managing an investor’s overseas currency exposure, either actively or passively. | N6 |
| Currency Risk | Risk of incurring losses in the value of overseas investments as a result of movements in international exchange rates. Can also refer to the additional volatility caused by exposure to assets in foreign currencies. Also known as exchange rate risk. | N6 |
| Currency Swap | Effectively the exchange of two sets of cash flows in different currencies. Involves the purchase/sale of a currency in the spot market against the simultaneous purchase/sale of the same amount of the currency in the forward market. The agreed payment in each currency changes hands on each swap date (unlike an interest rate swap, where the payments are netted off against each other). | N6 |
| Current assets | cash and other assets that are expected to be converted to cash within a year. Typically seen on a company balance sheet. | N5 |
| Current liabilities | a company’s debts or obligations that are due within one year. Typically seen on a company balance sheet. | N5 |
| Current Ratio | a common financial ratio of current assets to current liabilities. | N5 |
| Current Value Method | a procedure to allocate the Equity Value to the various equity interests (or Enterprise Value to the various debt and equity interests) in a business as though the business were to be sold on the Valuation Date, without considering the option-like payoffs of the equity interests. Contrast with Probability-Weighted Expected Return Method and Option Pricing Method. | N7 |
| Curve Risk | Risk that changes the shape and/or slope of the yield curve result in mismatched performance between an actual bond portfolio and its benchmark, or between assets and liabilities where these have different durations. | N6 |
| Cushion | In portfolio insurance products, the difference between the cost of buying the zero coupon bond and the principal amount guaranteed. (See also portfolio insurance.) | N6 |
| Custodian | Organisation responsible for the safekeeping of assets, income collection and settlement of trades for a portfolio; independent from the asset management function. | N6 |
| CVA | acronym for Company Voluntary Arrangement | N1 |
| CVL | acronym for Creditors Voluntary Liquidation | N1 |
| CVR | acronym for Contingent Value Right | N1 |
| Cyclical Stock | Security which is sensitive to movements in the economic cycle — generally performs well in periods of falling interest rates or growth but poorly during an economic downturn. For example, financial stocks and capital goods. (See also defensive stock.) | N6 |
| Cyclical Trend | Recurring movements in prices or interest rates, usually linked to stages in the business cycle. | N6 |
Reference
N1: referring to The Book of Jargon – Global Mergers & Acquisitions, first edition, the Latham & Watkins, available at https://www.lw.com/admin/Upload/Documents/BoJ_Global_MandA-locked-March-2015.pdf.
N2: referring to Glossary of Key M&A and Corporate Terms, 4th edition, Dr Anne Meckbach and Dr Tobias Grau, available at https://cms.law/en/deu/publication/glossary-of-key-m-a-and-corporate-terms-2020.
N3：referring to M&A Dictionary, Global PMI Partners, available at https://gpmip.com/dictionary/.
N4：referring to M&A jargon demystified, KPMG, available at https://issuu.com/kpmg_be/docs/kpmg_m_a_vakjargon_en_digital.
N5: referring to Simple Guide to M&A Terminology and Jargon, Lucas & Weston Ltd., available at https://uploads-ssl.webflow.com/5708da760dd2dc033a78bd13/5b7ea45f3dbc72645fbee4b2_L%26W%20-%20M%26A%20Glossary.pdf.
N6：referring to INVESTMENT DICTIONARY, MARSH & McLENNAN COMPANIES, available at https://www.mercer.com/content/dam/mercer/attachments/europe/Netherlands/ic-dictionary-mercer.pdf.
N7: referring to International Valuation Glossary—Business Valuation, November 2021, jointly published by ASA, CBV Institute, RICS and TAQEEM, available at https://www.appraisers.org/docs/default-source/default-document-library/international-business-valuation-glossary_en_final.pdf?sfvrsn=e37c69d4_2.
The above information is collected from the Internet and reorganized for the purposes of learning and sharing only and not for any other purposes. It can not be guaranteed to be error-free.