Class B vs. Class P...where's class J?
February 29, 2012 7:50 AM Subscribe
[Asking for a colleague] Question about share classes in terms of equity held in a start-up they used to work for. Differences between Class P and Class B, and implications of conversion.
posted by weaponsgradecarp to Work & Money (6 answers total)
Colleague says: "Let's say I own a small amount of Class B non-voting shares in a company that I used to work for. There are a small number of shareholders as the company is still privately held.
One of the small investors purchased Class P (preferred) non-voting stock but is now selling them to one of the larger investors. The Larger investor has apparently agreed with the CEO to change the class of the stock from Class P to Class B. The CEO has contacted me because he says that as a Class B stock-holder, he needs my permission. This surprises me but that's what he claims. His claim is that it would not dilute my share, as those stock already exist and that it would benefit me financially, as the third party stock holder is essentially agreeing to downgrade their stock. What are the implications of me either agreeing or not agreeing to this happening?"