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Owner issuing themselves stock?


randomep
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A microcap stock is majority owned by the CEO. Recently, he issued himself a tiny fraction of the total common shares as preferred stock. These shares are convertable 1:1 to common at any time. So the preferred stock have the same economic value as the common. He also paid slightly less than market value of the common for the preferred. But the kicker is that the preferred have a right to 20,000 common votes!

 

How is this legal?

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Guest Schwab711

http://le.utah.gov/xcode/Title16/Chapter10a/16-10a-S1003.html

Good state!

5(b)(iv)

 

Pm me and I can try to help. Unless you live close you'll need representation (even if you did youd probably want some). You can only argue for FV of rights, so maybe 3%-6% of holding unless you have a compelling case. High end of voting rights is generally 5%. If there's reason to believe these are scale tipping votes, you may have something. Otherwise, ya it's illegal but you take on a lot of risk and upfront capital to prove it.

 

On second thought, you may be able to argue for a little more. Still, high risk/low reward. Be sure of your case before pursuing.

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