What Is Non-Assessable Stock?
Non-assessable stock is a type of stock that protects investors from being asked to fork over additional money after their initial purchase. This means that once investors buy their shares, the company can’t come knocking for more cash. This lovely feature makes non-assessable stocks akin to a “what you see is what you pay” deal in the stock market boutique.
Key Takeaways
- No Surprises: Holders of non-assessable stock won’t get surprise bills for their shares.
- Historically Popular: This type of share became standard when investors got tired of the risky assessable stocks of yesteryears.
- Legal Assurance: Modern securities in many jurisdictions will usually state their non-assessable nature as a reassurance to investors.
Understanding Non-Assessable Stock
Non-assessable stock is the more modern, less drama-filled cousin of the assessable stock, which used to allow companies to ask for additional payments post-purchase. However, with the advent of non-assessable stock in the early 20th century, stock buying has become somewhat less of a high-stakes gamble and more of a fixed bet.
When companies issue stock with the tag ’non-assessable’, it means they promise not to issue additional calls for investment for that stock. This no-call promise applies regardless of whatever financial dungeons the company might find itself exploring.
Legal Considerations
Any equity offering registered with authorities like the SEC includes a cheerful declaration that the shares are “duly authorized, validly issued, fully-paid and non-assessable,” which is lawyer speak for “investors, sleep easy!”
Example in Action
Non-assessable stocks are like the polite party guests who assure you they won’t stay late or raid the fridge. For instance, a 1973 stock certificate from Pennsylvania Power & Light Company reassures investors with the phrase “fully paid and non-assessable,” signaling no after-party money calls.
Related Terms
- Assessable Stock: The unpredictable opposite of non-assessable stock. Invest at your own risk!
- Stock Certificate: The paper proof of your investment, often collectible, always reassuring if it reads “non-assessable.”
- Equity Securities: Shares that represent ownership in a company - sometimes they’re needy (assessable), sometimes they’re not.
Recommended Reading
- “The Intelligent Investor” by Benjamin Graham: Provides foundational perspectives on different types of stock.
- “Common Stocks and Uncommon Profits” by Philip Fisher: Delve into the nature of good investment stocks, non-assessable included.
- “Stocks for the Long Run” by Jeremy Siegel: Explore why non-assessable stocks might be a safer bet for long-term investments.
Investing in non-assessable stocks is like choosing a fixed price menu: you know the cost upfront, and you won’t be forced to pay for extras you didn’t order. Happy investing!
