What are the regulations?

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Hello Dan and Mat,
You guys mentioned in your article about the state of the market that companies can raise cash by issuing bonds or additional stocks. I am curious, are the any regulations that control such actions? As you mentioned in the article this action in effect dilutes the company shares in the market and as such hurts the investors.

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Asked on March 24, 2021 8:43 pm
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Thanks

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Posted by Mustapha Basso
Answered on March 25, 2021 6:53 am
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Hi there,

There are certainly regulations that all companies must adhere to, but overall - there is nothing that prevents them from issuing stocks or debt. That is just normal business practice to raise $$ to fund growth. In some cases it does hurt investors, in others it doesn't. Not every raise is the same and its important to understand the context behind each. Many times it is a good thing and although it may lead to short-term presure, the money raise is put towards long-term growth - a positive outcome.

Mat

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Posted by Mathieu Litalien
Answered on March 25, 2021 5:20 am
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