Re: An idea for stock market reform

[jackodonnell <jackodonnell@xxxxxxxx>]

Trond Andresen wrote:
>

> Now to jackodonnell <jackodonnell@xxxxxxxx>, who addresses a transitory
> scenario where today's type of stocks co-exist with a VB system. This of
> course raises difficulties, which Jack describes. A general remedy, I think,
> is that a VB reform must assume that it starts with all existing equity
> being converted to VBs, at market price. Then one can take it from there.

Ok, let us assume that questions (1), (2) and (3) [repeated below] are
somehow overcome and all equity is held as VB's. That still leaves
questions (4) and (5), which raise the issue of how equity is to be
disbursed once the initial VB's are redeemed.

Questions:

(1) Do existing holders of equity get to keep their present equity
positions?

(2) If so, do these VB's get the same dividend as existing equity
holders with company management deciding the portion of earnings to be
held by the corporation? [i.e.  -- if the corp. decides after selling
the VB's to retain all earnings to pay down debt, are the VB holders
left holding the bag while old equity holders experience growth in the
worth of their stock?]

(3) If not, how are they to be separated from their [and the present
legal] perception of what is theirs?

(4) For corporations not yet in existence [or otherwise made devoid of
common stock] who decides how much "equity" is to be sold after the
first round of VB's are redeemed? [i.e.  -- after the VB's are redeemed
who "owns" the equity that is then floating about? Is it disbursed among
the remaining holders, if any, of VB's? Or, is the amount to be issued
as replacement "equity" determined by some "generally accepted
accounting" method?]

(5) If all VB's expire concurrently who determines what "equity" is
needed, who is permitted to buy this equity and what price is to be paid
for the controlling votes?


--
			-- jbod

		Tax Privilege, Not People
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