Returns on Investment
(ROI), traditionally measured by annual yields (a combination of Dividend Income
and Share Price Growth) is the main objective or mission of Investment Funds.
Such Funds are employed in various sectors or industries, operating in various
geographies and economies to generate Profits. Profits which are then divided
into additional Investment (Reserves) and Dividends paid to shareholders.
Reserves can be invested into the same or other business operations to generate
more Profits and pay more Dividends or into other financial instruments to earn
Interest. A business with a proven track record of generating Profits and paying
Dividends regularly, can experience share book value growth or share market
price increase, giving shareholders capital gains on their initial investment
when their share are sold.
Key Benefits
Dividend Policy are clearly set
out in the investment prospectus and typically states that dividends will be
declared and paid on specific calendar dates for the fiscal period recently
ended and that the declared dividend amount will fall between a specified
percentage range of cash flow at the end of the fiscal period under review.
New operations may decide not to declare and pay dividends during the first
few years to allow the business share value to grow.
Share Value
of private companies is calculated by dividing the present book value of
Assets minus Liabilities by the number of currently issued shares. Share Price
of public companies is driven by complex supply and demand factors. As the
business makes profits, so too does Shareholders’ Value Grow.
The Board of Directors is elected or re-elected by
shareholders at an annual general meeting to serve for a specific term period
or directors can be appointed by a constituted quorum of the existing Board of
Directors in special cases to serve to the next annual general meeting. The
constituted board and its appointed sub-committees are responsible for
corporate governance and policies, implemented by management, that are
applicable to protect the interest of all stakeholders.
Quality Management is applied through the Chief
Executive Officer, Managing Director or General Manager position which is
appointed by the Board of Directors to implement the board’s policies and
oversee the daily operations. Audits are constantly performed internally and
reported directly to the Board of Directors to maintain the company’s
integrity. Legal and contractual issues are constantly reviewed and reported
directly to the Board of Directors for further decisions.
Exit Strategies are designed to allow shareholders
to, at the very least, recover their initial investment or benefit from
increases of the share value. The first option is normally to offer the shares
back to the company at book value, this “Buy Back” decision depend on the
company’s cash flow and agreement of the Broad of Directors. Shares can also
be privately transferred from seller to buyer at a negotiated price with the
agreement of the Broad of Directors. The Company can also apply to be listed
on a stock exchange and issue an Initial Public Offering (IPO) which will
allow shares to be traded to a wider public at market value.
