Forms of partnership
There is a huge number of forms of investment. Before concluding an investment contract you should take legal advice. Especially in questions of company law and tax deductions participation agreements can be formed in many ways.
The classical form of investment in a business is to get shares of a company or corporation. The most common method of capital procurement is the emission of shares of a public company.
But there are many other forms of investment than shareholding. The main differences are in liability and arbitrement of the investor. Many possibilities to limit liability, but to preserve entrepreneurial independence is so called mezzanine money. This form of financing is between co-venturing and secured credit.
Other forms of investment are:
Gilt: When the government wishes to borrow money, it issues loan stock, known as gilts. This is a very safe form of investment since the loan is guaranteed by the government. The price of gilts moves up and down to reflect the going interest rate.
Warrants:These are securities, which give the holder the right to subscribe to shares in a company at a given price and at fixed dates.
Option: The right, but not the obligation, to buy or sell securities at a fixed price within a specified period.
Derivative: This is a general term for any financial instrument which gives the option to buy or sell shares at a predetermined price - warrants and options are examples of this.
Traded options: These are similar to options but can be sold on to someone else before the expiry date.