What is a qualified transaction?

The qualification transaction is a scenario in which a private company is obtained by a greater entity and then issues shares of shares that were traded publicly. Qualification transactions usually use a strategy that is sometimes used as a Capital Pool, allows a private company that is now operated as a subsidiary of this capital fund to rework its stock offers to trade publicly. This approach can help the Capital Fund, which does not separately issue shares to generate revenue on the basis of demand for shares issued by its private subsidiary companies.

In order to understand how the qualification transaction is, it is necessary to imagine a private company that is currently publishing a sharing of a small group of investors. Assuming that the company is perceived as a large part of the potential, Capital pool will receive all the shares issued from investors and eventually acquire the full ownership of that company. SincspolečNost E capital pool does not show any type of commercial traffic and holds only cash assets, the operation of this subsidiary, including the issue of publicly traded shares of shares, becomes an important source of income.

In countries that allow this type of trade structure, such as Canada, there are usually certain provisions that are used to determine whether the company's capital funds can actually participate in the qualification transaction. This usually involves the ability to manage the purchase of the private company concerned and the ability to fully comply with all regulations within 24 months from the acquisition. If you do not do so, this may lead to a suspension of trading with those issued by a private subsidiary and perhaps completely excluded from trading.

The qualification transaction is associated with a certain risk. Capital Pools Takes to risk that public interest in the company and its public stock ofThe PCE will not be high, as expected, which will lead to a lower required price per share. In addition, market changes could undermine the volume of a trading company, which would further reduce the value of the shares issued. In the case, Capital Pool officers may consider it necessary to withdraw from the public market and sell the company as a means of minimizing the total amount of loss.