Flow-through shares are an effective means of attracting
investment when capital needs are high and the profit horizon is
distant. Only flow-through shares enable the conversion of current
and future losses into current operating capital. This presents a
significant opportunity for renewable energy markets and we expect
to see greater use of flow-through shares as investment in those
markets increases.
So what, then, are flow-through shares and how do they work?
Nature of Flow-Through Shares
A flow-through share is a common share to which certain
contractual rights attach. These rights obligate the issuer to
renounce (flow through) qualifying expenses to the share
subscriber, which expenses cannot exceed the particular
subscriber's subscription amount. The subscriber may then
deduct those qualifying expenses for income tax purposes.
