Case 2 | Shares Distribution
In case of failure to payment (Investor 1 and Investor 5) other investors can compensate the project cost. by increasing their shares in the Fund.
Increase and decrease of Investors’ shares in case of compensation are calculated by two methods:
Investment Ratio Model: (Initial Investment ÷ Total Investment Needed) x 100. In that case investor 2 would increase hi shares to 25,5% ((255.000 ÷ 1.000.000) x 100.)
Issued and Outstanding Shares Model: Investors’ shares are not determined by their contributions according to the investment needed. The nominal value of each share is USD 1.000. In that case;
• Investor 2 would receive 255 shares (60 Outstanding Shares and 195 Issued Shares)
• If 1.000 shares are issued at the end of the project: Investor 1 will receive 45 Outstanding shares whereas investor 2 would increase his shares to 255. Investor 1’s percentage in the Fund would decrease to 4,5% and investor 2’s percentage in the Fund would increase to 25,5% at the end of the project.
• In that case study Investor 4 would increase his shares to 24% and investor 6 to 10%.