IAS (International Accounting Standards)

Accounting rules and procedures developed by the International Accounting Standards Committee and to be administered by the IASB. All EU countries are required to adopt IAS by 2005.

IASB (International Accounting Standards Board)

The quasi-public body established in 2001 to develop a uniform set of international accounting standards (IAS).

Incentive Stock Options or ISOs

(USA) Stock options available only to full time employees that are entitled to special tax treatment under the USA Internal Revenue Code. The employee who exercises the option does not have to pay tax until the employee actually sells the stock. However, the employee may be subject to alternative minimum tax. The company does not get a tax deduction. Similar arrangements exist in other jurisdictions, subject to local and tax and legal requirements. See ‘Non-qualified Stock Options’ and ‘Combination Stock Option Plan’ for comparison.

Independent or Outside Director

A member of the board of directors who is not an employee of the company nor affiliated with a controlling stockholder of a company. The definition of ‘independent’ may be further defined in different jurisdictions or markets.

Index

A benchmark against which financial or economic performance is measured, such as the S&P 500, FTSE 100, etc.

Indication of Interest

(USA) A non-binding expression of interest by a dealer or investor in purchasing securities. In the USA, securities may be offered after a registration statement has been filed, but may not be sold until the statement is declared effective by the SEC. During the period after filing and before effectiveness, underwriters obtain non-binding indications of interest.

Information Rights

The contractual right to obtain information about a company, including, for example, attending board meetings. Typically received by venture capitalists investing in privately held companies.

Initial Public Offering (IPO)

The registered public offering of securities of an issuer to the public for the first time. In the UK, also referred to as a ‘flotation’.

Inside Spread or Inside Quote

The difference between the highest bid and lowest ask price being quoted by market makers for a security.

Insider Trading

The term commonly used in reference to the buying and selling of the company’s securities based on material information relating to the company that has not been made public. Insider trading according to this definition is against the law in most countries. The term may also be used to refer to the buying and selling of shares of a public company by its officers, directors, and major stockholders. In the USA transactions by officers, directors, and 10% stockholders must be reported monthly to the SEC under Section 16 of the Securities Exchange Act of 1934. Reporting rules for similar trading may also exist in other countries or markets. See ‘Tipper and Tipee’.

Insiders

Directors, officers, key employees, and any other persons privy to material non-public information relating to a company. This may be further defined in different countries or markets.

Institutional Investor

An institution such as an investment company, mutual fund, insurance company, pension fund or endowment fund that generally has substantial assets and experience in investments. In many countries, institutional investors are not protected as fully by securities laws because it is assumed that they are more knowledgeable and better able to protect themselves. They account for a majority of overall trading volume in most major securities markets.

Integration

(USA) A concept under the Securities Act of 1933 which requires that nominally separate offerings be ‘integrated’ and treated as a single offering for the purpose of determining if they are exempt from the registration requirements of that act.

Intellectual Property

Patents, copyrights, trademarks, trade secrets and similar rights in ideas, concepts, etc.

Internal Rate of Return (IRR)

Compounded rate of return on an investment that an investor receives on an investment at the time of sale or other exit.

In-the-Money Option

An option is described as ‘in-the-money’ when the market price of the underlying security or commodity is higher than the strike price of the option.

Invested Capital

See ‘Capitalisation’.

Investment Bank or Banker

A person or firm engaged in the investment banking business, which typically includes activities such as underwriting the sale of securities, valuing businesses, advising on the financial aspects of mergers and acquisitions, etc.

Investment Letter

A written agreement between an investor and a seller of securities in a private placement.

Investment Services Directive (ISD)

A Directive produced by the European Commission regarding the provision of investment services within the member states of the European Union. The Directive has been described as the ‘passport to Europe’ for securities houses. The key feature of the Directive is that of ‘mutual recognition’, in that: a) any firm approved to provide investment services within its home state is mutually recognised by all other member states as being allowed to provide the same services within those other member states; and b) any stock market or exchange that is recognised by its Competent Authorities within one member state is mutually recognised in all other member states as being allowed to offer its services (including the installation of trading system computer terminals) within those other member states. A new ISD is currently being negotiated with a focus on establishing a single marketplace for securities covering all member states of the European Union. See ‘Competent Authority’.

IPO

See ‘Initial Public Offering’.

IPO Participation Rights

Rights sometimes negotiated by investors during periods when public markets are strong, entitling the investors to be allotted a portion of the stock to be sold to the public in an IPO.

IRS

(USA) Internal Revenue Service, the USA federal taxing authority.

Issued and Outstanding Stock

Issued stock of a corporation that is still outstanding and has not subsequently been repurchased by the corporation. See ‘Treasury Stock’ for comparison.

Issuer

The legal entity offering its securities for sale or subscription, whether it is a corporation, partnership, trust, or other appropriate entity.