Direct Debit Dividend Contributions also known as 3DC are payments made towards
shareholders
A shareholder (in the United States often referred to as stockholder) of corporate stock refers to an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the ...
for
shares
In financial markets, a share (sometimes referred to as stock or equity) is a unit of equity ownership in the capital stock of a corporation. It can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Sha ...
which have been issued on credit.
Issuing stock on credit is considered appropriate when a
Stakeholder (such as company's founder or other key person) wishes to retain involvement in a business but is unable to raise the capital required to pay for stock. In such circumstances the company's shareholders may agree to issue the desired level of stock against a plan where shares must be paid for through direct debit dividend contributions. 3DC differs from
Stock options
In finance, an option is a contract which conveys to its owner, the ''holder'', the right, but not the obligation, to buy or sell a specific quantity of an underlying asset or instrument at a specified strike price on or before a specified dat ...
in that the recipient is awarded shareholder status from the moment the 3DC arrangement is agreed.
3DC is often regarded as a reward for efforts achieved (usually for the groundwork required in setting up a new business). It also serves as an incentive to ensure future performance of the company's stock.
See also
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Direct debit
A direct debit or direct withdrawal is a financial transaction in which one organisation withdraws funds from a payer's bank account. Formally, the organisation that calls for the funds ("the payee") instructs their bank to collect (i.e., debit) ...
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Authorised capital
The authorised capital of a company sometimes referred to as the authorised share capital, registered capital or nominal capital, (particularly in the United States) is the maximum amount of share capital that the company is authorised by its c ...
*
Share capital
A corporation's share capital, commonly referred to as capital stock in the United States, is the portion of a corporation's equity that has been derived by the issue of shares in the corporation to a shareholder, usually for cash. ''Share ...
External links
Detailed break downfrom
Companies House
Companies House is the executive agency of the British Government that maintains the Company register, register of companies, employs the company registrars and is responsible for Incorporation (business), incorporating all forms of Company, co ...
Corporate law
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