Respuesta :
Given , In the beginning, there were 1,000,000 shares, with a $1 conversion price. Following negotiations, the price was lowered to $0.625 per share, which translates to 1.6 shares (or 1/0.625) for each preferred share converted.
- The number of outstanding shares is equal to 1,600,000 + 1,000,000=2,600,000
- Participants Actual Shares( percentage after round 1) Converted shares( After round 2) Percentage( after round 2)
Founder 1,000,000(40%) 1000000 32.25%
Round 1 500,000(20%) 500000 16.12%
Round 2 1,000,000(40%) 1600000 51.61%
Total 2,500,000 3,100,000
- A shareholder is protected from dilution of their shareholding by an anti-dilution clause. When the quantity of shares in a corporation increases but the stake of a shareholder declines, this is known as dilution.
- Anti-dilution clauses can be included in the terms of ordinary shares, but they usually only apply to preference shares.
- This is particularly concerning if the exposed shareholder is the company's founder or another important individual. Therefore, excessively diluting their shares may reduce their motivation to participate actively in the company and support its expansion.
How is the percentage of ownership determined?
Percentage Ownership Interest refers to the proportion of the voting power of the company that is, with respect to any Person, represented by votes associated with voting securities of the company that are, as of record, owned by that Person or by its nominees.
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