Security Finance

If the finance is mobilized through issue of securities such as shares and debenture, it is called as security finance. It is also called as corporate securities. This type of finance plays a major role in the field of deciding the capital structure of the company.

Characters of Security Finance

Security finance consists of the following important characters:
1. Long-term sources of finance.
2. It is also called as corporate securities.
3. Security finance includes both shares and debentures.
4. It plays a major role in deciding the capital structure of the company.
5. Repayment of finance is very limited.
6. It is a major part of the company’s total capitalization.

Types of Security Finance

Security finance may be divided into two major types:
1. Ownership securities or capital stock.
2. Creditorship securities or debt capital.

Ownership Securities

The ownership securities also called as capital stock, is commonly called as shares.  Shares are the most Universal method of raising finance for the business concern.  Ownership capital consists of the following types of securities.

• Equity Shares
• Preference Shares
• No par stock
• Deferred Shares