Regarding The Company's New Projects And Equity Allocation Issues For New Shareholders To Invest In

In the startup stage (early stage of business), your company has a 4, 3, 3 shareholding structure (that is, each holds 40%, 30%, and 30% of the shares). You and A are both investors, and the equity ratio is relatively small. Party B does not contribute capital, but is responsible for operations. The core strength lies with Party B, which has a larger share. This is correct, but there are pitfalls, discussed later.

Now there are new projects that need financing, which involves equity dilution. You need to negotiate with AB as a tripartite. Which party downplays the parts that need to be expanded also has a bearing on the overall situation. To put it simply, for example, the original company has assets of 1 million and owns 1 million shares at 1 yuan per share. You and A each hold 30% of the shares, that is, each has 300,000 shares, and B has 400,000 shares. Now we need financing, which is to increase capital and expand shares. Suppose we need to raise 1 million yuan and then issue 1 million shares. At this time, the company's assets will reach 2 million yuan, and the total number of shares will be 2 million shares. Then the equity ratio (shareholding ratio) between you and A becomes: 300,000 shares/2 million shares=15%, and B’s shareholding ratio is: 400,000 shares/2 million shares=20%, that is to say, the overall shareholding ratio Shares were diluted and shareholdings declined.

Does it have anything to do with the new project? This depends on whether the new project is under the original company's name. If the original company is called "Deli" company, and this new project is under the name of "Deli" company, then as mentioned above, the equity of you and AB's original shareholders will be diluted. If another subsidiary is established to become the "future" subsidiary of this new project (note that it is not a branch, the branch and the subsidiary are different, if a subsidiary is established, then the parent company enjoys the shareholder rights of the subsidiary), one of the parties will Dilute equity, e.g. if "individual employees and friends" are your employees and friends, then dilute from your equity in the parent "deli" company. It has nothing to do with AB. At this point, you take control of the new project. Of course, the new project still needs B to operate it, so it is better to plan it under B’s name. That is, the subsidiary "Future" is controlled by B, and B's shareholding ratio in the parent company "Deli" is still 40%. You and A's shareholding ratio in the parent company is still 30% each, but B's equity setting in the subsidiary "Future Company" can be reconfigured.

Finally, let’s talk about the disadvantages of the original 4, 3, 3 shareholding structure. According to the law:

1. Those who hold more than 1% of the shares have the right to complain about company affairs;

2. Those who hold more than 10% of the shares can convene an extraordinary board of directors, extraordinary shareholders' meeting, or even request the court to dissolve the company!

3. Holding more than one-third of the shares can enjoy one-vote veto power on major decisions

4. If the company holds more than half of the shares, the transfer of equity must be approved by more than half of the shareholders.

5. Holding more than two-thirds of the shares, covering the sky with one hand! In addition to the above rights, you can also amend the articles of association!

During the entrepreneurial period, which is the start-up period of the company, it is recommended that decision-makers hold no less than two-thirds of the shares. Now you and A own 30%, no more than one third (i.e. less than 33.3%), any decision must be voted by B, but B's 40% stake is also very low. If a subsidiary is not established, everyone's equity will be diluted. If the shareholding ratio is diluted to less than one-third, it may mean that 10% of the shareholding ratio has been kidnapped! From now on, you will no longer be able to decide everything about the company. If those who hold 10% of the shares make trouble, they can apply to the court to dissolve the company! Unless you crowdfund equity with many people, each person’s investment ratio does not exceed 1% (because if you hold more than 1% of the shares, you can sue the court for what happened to the company), but you may face the problem of not being able to find a A problem that comes to so many people. The problem with crowdfunding. If B owns 70% of the equity from the beginning, no matter how many projects require financing later, B can slowly dilute the equity without worrying about control of the company. You and A are just investors and do not participate in the operation. , does not require a large shareholding ratio, as long as the company has an internal dividend negotiation mechanism. For example, if the equity is low but the year-end dividend is larger, this can be achieved by drafting a dividend agreement. Now that the equity ratios of the three shareholders are written into the company's articles of association or sealed agreement, legal issues are involved!

Therefore, it is recommended to set up a subsidiary and have B dilute the equity. It is best to wait for three-party consultations before making a final decision. For more questions, please contact Huashen Capital Group. Huashen Capital Group focuses on business model optimization, equity involvement, investment and financing, listing, corporate resource integration and other businesses. Work hard with you!

标签： #Equity #Shareholdings #Dilution #Ratio #Dividends