198 Government Finance Statistics Manual 2014
shares are those that provide for participation in the
residual value on the dissolution of an incorporated
enterprise. Such shares are also equity securities, re-
gardless of whether the income is fi xed or determined
according to a formula. (For nonparticipating pre-
ferred shares, see paragraph 7.150.) In addition to the
purchase of shares, the value of equity can be aff ected
by a range of factors, such as share premiums, accu-
mulated reinvested or retained earnings, or revalua-
tions. In addition, a direct investor may increase its
equity in an affi liate by providing goods and services
or assuming debt.
7.167 Depository receipts are securities that repre-
sent ownership of securities listed in other economies.
Depository receipts listed on one exchange represent
ownership of securities listed on another exchange,
and ownership of the depository receipts is treated as if
it represents direct ownership of the underlying securi-
ties. Depository receipts facilitate transactions in secu-
rities in economies other than their home listing. Th e
underlying securities may be equity or debt securities.
7.168 Equity may be subdivided into listed shares,
unlisted shares, and other equity. Both listed and un-
listed shares are equity securities (securities are de-
fi ned in paragraph 7.119). Listed shares are equity
securities listed on an exchange and may be referred
to as quoted shares. Unlisted shares are equity secu-
rities not listed on an exchange. Listed and unlisted
shares tend to be issued by diff erent types of corpora-
tions (unlisted shares are oft en issued by subsidiaries
and smaller businesses) and typically have diff erent
regulatory requirements.
7.169 Other equity is equity that is not in the
form of securities. Th is can include equity in quasi-
corporations, such as branches, trusts, limited liability
and other partnerships, unincorporated funds, and
notional units for ownership of real estate and other
natural resources. Th e ownership of many interna-
tional organizations is not in the form of shares and
should be classifi ed as other equity (although equity in
the Bank for International Settlements is in the form
of unlisted shares). Ownership of currency union cen-
tral banks is included in other equity.^46
7.170 Most general government units do not have
liabilities in the form of equity and investment fund(^46) See the BPM6, paragraph A3.44.
shares. However, in two cases, it is possible to show a
general government unit with liabilities for equity and
investment fund shares. Th e fi rst relates to some units
(usually special purpose entities) that are established
legally as public corporations but carry out only fi scal
and quasi-fi scal activities—they are treated as part of
general government (regardless of their legal status)
because they are not considered to be separate insti-
tutional units, unless they are nonresident. Second,
when a unit under the control of government is legally
established as a corporation but functions as a non-
market producer, such a unit is also part of general
government, as explained in paragraph 2.41.
7.171 Th e general principles of valuation at mar-
ket prices given in paragraphs 7.20–7.33 apply to eq-
uity. Equity can be readily valued at its current market
prices when it is regularly traded on stock exchanges
or other fi nancial markets.
7.172 However, there may be no observable market
prices for unlisted shares and other equity positions
(e.g., for equity in direct investment enterprises, un-
listed and delisted companies, listed but illiquid compa-
nies, joint ventures, and unincorporated enterprises).
7.173 When actual market values of equity are not
available, an estimate is required. One approach is to
use information from the stock market on a similar
listed share, as described in paragraph 7.29. Alterna-
tive methods of approximating the market value of
shareholders’ equity are outlined in 2008 SNA, para-
graphs 13.71–13.73, and include the following: recent
transaction price, net asset value, present value/price
to earnings ratios, book values reported by enterprises
with macro-level adjustments by the statistics com-
pilers, own funds at book value, and apportioning
global value. Th e value of other equity is equal to the
value of the unit’s assets minus the value of its liabili-
ties. So for unincorporated enterprises, such as quasi-
corporations, net worth is zero and the estimated value
of other equity can be negative if the value of liabilities
exceeds the value of the assets.^47
Investment fund shares or units (62052, 62152, 62252, 63052, 63152, 63252)
7.174 Investment funds are collective investment
undertakings through which investors pool funds for(^47) Incorporated corporations have a limited liability toward their
shareholders so that the minimum value of their equity is zero.