taxud/2414/08 - European Commission - Europa

tokens issued by businesses to encourage consumer loyalty, for example bonus vouchers,
collectable points which can be exchanged against goods or services, etc.;
(ii) supply of securities
Under Article 135a (8) of Directive 2006/112/EC "supply of securities" means the supply
of tradable instruments other than an instrument establishing title to goods or to the rights
referred to in Article 15(2), representing financial value and reflecting any one or more
of the following:
(a)
(b)
an equity ownership position in a company or other association;
a creditor's position for debts;
(c) unit ownership in undertakings for collective investment in the securities referred
to in points (a) or (b), in other exempted financial instruments referred to in points (a) to
(d) of Article 135(1) or in other undertakings for collective investment;
This provision is complemented by Article 9 of the Regulation which provides for the
following:
The definition of the "supply of securities" provided for in point (8) of Article 135a of
Directive 2006/112/EC shall cover the provision of at least the following:
(1) equity securities, including shares;
An equity security is a share in the capital stock of a company (typically common stock,
although preferred equity is also a form of capital stock). The holder of equity is a
shareholder, owning a share, or fractional part of the issuer. Equity securities are not
entitled to any payment. In bankruptcy, they share only in the residual interest of the
issuer after all obligations have been paid out to creditors. However, equity generally
entitles the holder to a pro rata portion of control of the company, meaning that a holder
of a majority of the equity is usually entitled to control the issuer. Equity also enjoys the
right to profits and capital gain and equity holders are entitled to the "upside" of the
business and to control the business. A share is one of a finite number of equal portions
in the capital of a company, entitling the owner to a proportion of distributed, nonreinvested
profits known as dividends and to a portion of the value of the company in
case of liquidation.
(2) instruments recording the promise of repayment of a debt, including debentures,
bonds and corporate bonds, promissory notes, Euro debt securities and other
tradable commercial papers;
Debt securities typically require regular payments (interest) to the holder, equity
securities are not entitled to any payment. Holders of debt securities receive only interest
and repayment of principal regardless of how well the issuer performs financially.
Furthermore, debt securities do not have voting rights outside of bankruptcy. They exist
in various forms:
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