Adding a new share class
Whenever you add a new share class on Nimity you get to record the following properties associated with the newly created share class.
To add a new share class on Nimity, simply go to the Share Class page (Cap table > Share classes) and click on the "Add Share Class" button. Once you do so, you will be asked to fill in the following:
Voting Rights: Voting rights determine the extent to which shareholders can participate in the decision-making process of a company. Different share classes may have different voting rights. Typically, each share class is entitled to one vote per share.
Pre-emption Rights: Pre-emption rights, also known as subscription rights, provide existing shareholders with the opportunity to maintain their proportionate ownership in the company during a new issuance of shares. If the company plans to issue new shares, shareholders with pre-emption rights have the first right to purchase these shares in proportion to their existing holdings. Pre-emption rights help protect shareholders from dilution and maintain their ownership percentage.
Anti-dilution Rights: Anti-dilution rights are provisions designed to protect investors from dilution in the event of subsequent financing rounds or stock issuances at a lower valuation. These rights can be triggered if new shares are issued at a price lower than the price paid by the original shareholders. Anti-dilution provisions may adjust the conversion ratio or exercise price of convertible securities, ensuring that existing shareholders are not disproportionately affected by the dilution.
Liquidation Preference Seniority and Multiple: Liquidation preference refers to the order in which shareholders are entitled to receive distributions in the event of a company's liquidation or sale. Seniority determines the priority of payment among different share classes. Shareholders with higher seniority have a higher priority in receiving their invested capital back. The multiple represents the amount of the liquidation preference that each share class is entitled to receive. For example, a 1x liquidation preference means that the shareholders will receive their original investment amount before any distribution is made to other shareholders, while a 2x liquidation preference means they will receive twice their investment amount.
Participating Shares: If a share class is classified as participating, it means that the shareholders of that class not only receive their liquidation preference but also have the right to participate in the distribution of any remaining proceeds on a pro-rata basis with other shareholders. In other words, participating shareholders are entitled to receive their liquidation preference first and then participate alongside other shareholders in the distribution of the remaining assets or proceeds. This gives participating shareholders the potential to receive additional returns beyond their initial liquidation preference if there is a surplus.
Non-participating Shares: Conversely, non-participating shares only provide the shareholders with their liquidation preference, if applicable. Once the shareholders of non-participating shares have received their liquidation preference, they do not further participate in the distribution of any remaining proceeds. Non-participating shareholders receive a fixed payout equal to their liquidation preference and do not share in any additional distribution, even if there is a surplus.