"Class B" arrangements in companies – whether in the form of stock or some other contractual right – are the product of many tradeoffs. The company wants investor capital but it does not want to give up voting control or even any voting rights. The company doesn’t want to subject itself to all the restrictions of a commercial loan but is willing to give up certain preferences on liquidation. The company’s controlling shareholders or members do not want to dilute their economic upside as the company grows but are willing to give up certain current distribution preferences. “Class B” holders may be willing to surrender many of the attributes of common stock or full equity participation but they have will have demands for liquidation preferences and redemption rights. This program will provide you with a practical guide to planning, structuring and drafting “Class B” stock, membership interests or other business arrangements.
• Structuring and drafting “Class B” ownership interests in corporations and LLCs
• Restricted or no voting rights – and relationship to redemption rights
• Dividend or distribution preferences, and preferred current returns generally
• Liquidation rights and relationship to secured and unsecured lenders
• Anti-dilution rights, conversion rights, other investor rights
• Tax issues in “Class B” arrangements