[{"data":1,"prerenderedAt":515},["ShallowReactive",2],{"document-shares-capital-description-preferred-shares-D1017":3},{"document":4,"label":23,"preview":11,"thumb":24,"thumb600":25,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":26,"breadcrumb":30,"related":36,"customDescModule":175,"customdescription":6,"mdFm":176,"mdProseHtml":514},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":15,"keywords":22},"SHARES CAPITAL DESCRIPTION DESCRIPTION OF SHARE CAPITAL Characteristics: Class [SPECIFY] common shares: Voting, dividends: as declared by Board, subject to the rights of other classes of shares; right to remaining property pari passu with Class [SPECIFY] common shares. Class [SPECIFY] common shares: Non voting, dividends as declared by Board, subject to the rights of other classes of shares; right to remaining property pari passu with Class [SPECIFY] common shares. Class [SPECIFY] preferred shares: - Voting. - Dividend: rank [NUMBER], non-cumulative, fixed rate of [PERCENTAGE %] per annum payable, each month, in money, property or issue of shares calculated on redemption price; Redemption price = monetary consideration upon issuance or FMV of consideration received upon issuance, the whole on generally accepted accounting and valuation principles, subject to revision by the taxation authorities. If part of consideration received is added to stated capital account, then deemed to have been issued for the full amount of the consideration received except Class [SPECIFY] stated capital. - Liquidation: rank [NUMBER]; price = redemption price + dividends. - Redeemable by the Corporation at redemption price on [NUMBER] day notice - Can be purchased for cancellation; price=lowest price obtainable but not exceeding redemption price - Changes to voting or stated capital clause = [FRACTION] of votes in addition to other approval required by the Act. Class [SPECIFY] preferred shares: - Non voting. - Dividends: rank [NUMBER], non-cumulative, [NUMBER] [PERCENTAGE %] per month calculated on redemption price, payable in money, property or issue of shares of any class. - Liquidation: rank [NUMBER]. - Redeemable by the Corporation; price = redemption price + dividends, on one day notice. Redemption price = see Class [SPECIFY] preferred shares making appropriate changes for Class [SPECIFY]. - Can be purchased for cancellation. - Changes to voting or stated capital clause = [FRACTION] of votes in addition to other approval required by the Act. Class [SPECIFY] preferred shares: - Voting. - Dividends: ranking [NUMBER], non-cumulative, [NUMBER] [PERCENTAGE %] per month calculated on redemption price, payable in money, property or issue of shares of any class. - Liquidation: rank [NUMBER]. - Redeemable by the Corporation; price = redemption price + dividends, on one day notice. - Redeemable by the holder upon written request of [NUMBER] days notice and surrender of certificate at redemption price if not contrary to applicable [YOUR COUNTRY LAW]. If contrary to applicable [YOUR COUNTRY LAW], pro rata of purchase moneys allocable rounded to the next lower multiple of [AMOUNT]. Redemption price: see Class [SPECIFY] preferred shares with appropriate changes for Class [SPECIFY] preferred shares. - Can be purchased for cancellation - Changes to voting or stated capital clause = [FRACTION] of votes in addition to other approval required by the Act. Class [SPECIFY] preferred shares: - Non voting. - Dividend: ranking [NUMBER], non-cumulative, [NUMBER] [PERCENTAGE %] per month calculated on redemption price, payable in money, property of issue of shares. - Liquidation: rank [NUMBER]. - Redeemable by the Corporation. - Redeemable by holder: see Class [SPECIFY] preferred shares with appropriate changes for Class [SPECIFY] preferred shares. - Can be purchased for cancellation. - Changes to voting or stated capital clause = [FRACTION] of votes in addition to other approval required by the Act. SCHEDULE 1 3 - The classes and any maximum number of shares that the Corporation is authorized to issue Unlimited number of Class [SPECIFY] common shares; Unlimited number of Class [SPECIFY] common shares; Unlimited number of Class [SPECIFY] preferred shares; Unlimited number of Class [SPECIFY] preferred shares; Unlimited number of Class [SPECIFY] preferred shares; and Unlimited number of Class [SPECIFY] preferred shares. The [SPECIFY] common shares shall have attached thereto the following rights, privileges, restrictions and conditions: Each Class [SPECIFY] common share shall entitle the holder thereof to [NUMBER] vote at all meetings of the shareholders of the Corporation (except meetings at which only holders of another specified class of shares are entitled to vote pursuant to the provisions hereof or pursuant to the provisions of the [COUNTRY] Business Corporations [ACT/LAW/RULE] (hereinafter referred to as the \"Act\"). Subject to the provisions of the Act or as otherwise expressly provided herein, the holders of the Class [SPECIFY] common shares shall not be entitled to receive notice of, nor to attend or vote at meetings of the shareholders of the Corporation. In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of assets of the Corporation among shareholders for the purpose of winding up its affairs, subject to the prior rights, privileges, restrictions and conditions attaching to the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares and to any other class of shares ranking prior to the Class [SPECIFY] common shares or the Class [SPECIFY] common shares, the holders of the Class [SPECIFY] common shares and the holders of the Class [SPECIFY] common shares shall be entitled to receive the remaining property of the Corporation. Subject to the prior rights, privileges, restrictions and conditions attaching to the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares, the Class [SPECIFY] preferred shares and to any other class of shares ranking prior to the Class [SPECIFY] common shares or the Class [SPECIFY] common shares, the holders of the Class [SPECIFY] common shares and the holders of the Class [SPECIFY] common shares are entitled to receive dividends when, as, to the extent and in such amounts as may be declared by the directors of the Corporation to be payable on each issued and outstanding Class [SPECIFY] common share and each issued and outstanding Class [SPECIFY] common share. The holders of the Class [SPECIFY] common shares and the holders of the Class [SPECIFY] common shares shall rank equally with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among shareholders for the purpose of winding up its affairs. No dividend may be declared and paid on the Class [SPECIFY] common shares and the Class [SPECIFY] common shares which would result in the Corporation having insufficient net assets to redeem all of its issued and outstanding Class [SPECIFY] preferred shares, Class [SPECIFY] preferred shares, Class [SPECIFY] preferred shares and Class [SPECIFY] preferred shares. The [SPECIFY] preferred shares should have attached thereto the following rights, privileges, restrictions and conditions: Each Class [SPECIFY] preferred share shall entitle the holder thereof to [NUMBER] vote at all meetings of the shareholders of the Corporation (except meetings at which only holders of another specified class of shares are entitled to vote pursuant to the provisions of the Act). The holders of the Class [SPECIFY] preferred shares shall be entitled to receive during each month, as and when declared by the board of directors, but always in preference and priority to any payment of dividends on the other shares of the Corporation, non cumulative dividends at a fixed rate of [PERCENTAGE %] percent per annum calculated on the Class [SPECIFY] preferred redemption price (as hereinafter in paragraph II. (g) defined of each such share payable in money, property or by the issue of fully paid shares of any class of the Corporation",null,"Shares Capital Description Preferred Shares","14",106,"doc","https://templates.business-in-a-box.com/imgs/1000px/shares-capital-description_preferred-shares-D1017.png","https://templates.business-in-a-box.com/imgs/250px/1017.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#1017.xml",{"title":6,"description":6},[16,19],{"label":17,"url":18},"Legal Agreements","/templates/business-legal-agreements/",{"label":20,"url":21},"Incorporation Agreements","/templates/incorporation-agreement/","shares capital description preferred shares","Shares Capital Description Preferred Shares 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Acquisition","/template/tender-of-shares-for-acquisition-D351","https://templates.business-in-a-box.com/imgs/250px/351.png",{"label":70,"url":71,"thumb":72,"extension":10},"Agreement of Purchase and Sale of Shares","/template/agreement-of-purchase-and-sale-of-shares-D322","https://templates.business-in-a-box.com/imgs/250px/322.png",{"label":74,"url":75,"thumb":76,"extension":10},"Offer to Purchase Shares Agreement","/template/offer-to-purchase-shares-agreement-D334","https://templates.business-in-a-box.com/imgs/250px/334.png",{"label":78,"url":79,"thumb":80,"extension":10},"Shares Transfer Agreement Short","/template/shares-transfer-agreement-short-D346","https://templates.business-in-a-box.com/imgs/250px/346.png",{"label":82,"url":83,"thumb":84,"extension":10},"Pledge of Shares of Stock","/template/pledge-of-shares-of-stock-D407","https://templates.business-in-a-box.com/imgs/250px/407.png",{"description":86,"descriptionCustom":6,"label":87,"pages":88,"size":89,"extension":10,"preview":90,"thumb":91,"svgFrame":92,"seoMetadata":93,"parents":95,"keywords":94,"url":100},"SHAREHOLDERS AGREEMENT This Shareholders Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Company\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [FIRST SHAREHOLDER NAME] (the \"First Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [SECOND SHAREHOLDER NAME] (the \"Second Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [THIRD SHAREHOLDER NAME] (the \"Third Shareholder\"), an individual with his main address located at OR a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WITNESSETH: WHEREAS, the present distribution of shares of the Company is as follows: Name Number of Shares WHEREAS, in order to insure the harmonious and successful management and control of the Company, and to provide for an orderly and fair disposition of shares of common stock of the Company now or hereafter owned by any Shareholder; NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and intending to be legally bound, the parties hereby agree as follows: Definitions and organisation of the company \"Offering Shareholder\" means any Shareholder, or his personal representatives, heirs, administrators, and executors, as the case may be, who pursuant to this Agreement must or does offer all or any of his Shares to the Company or the Continuing Shareholders. \"Continuing Shareholders\" means all Shareholders other than an Offering Shareholder. \"Shares\" means shares of Common Stock of the Company now or hereafter owned by any Shareholder. \"Buyer\" means the Company or those Continuing Shareholders who purchase an Offering Shareholder's Shares pursuant to this Agreement. \"Management Shareholder\" means First Shareholder, Second Shareholder and Third Shareholder. ORGANISATION OF THE COMPANY The affairs of the Company will be managed by a board of [NUMBER] directors unless changed by a unanimous Directors' Resolution. The present directors of the Company are [DIRECTORS' NAMES]. It is agreed that [SHAREHOLDERS' NAMES] shall each be entitled to elect one director to the board of directors of the Company so long as each is a Shareholder. Two (2) directors shall constitute a quorum for the transaction of any business at any meeting of the board of directors. At all meetings of the board of directors, every motion to be carried must receive a majority of the votes cast, subject to the provisions of subparagraphs 2.4 and 2.5. Unless otherwise agreed, board meetings will be held at the head office of the Company. In the event that a nominee to the Board of one of the Shareholders shall fail to vote and act as a director to carry out the provisions of this agreement, then the shareholders agree to exercise their right as shareholders of the Company and in accordance with the Articles of the Company to remove such nominee from the Board and to elect in the place or stead thereof such individual who will use his/her best efforts to carry out the provisions of this agreement but only in the event that the Shareholder whose nominee has been removed fails to appoint a successor within a period of fourteen days from the date such nominee has been removed. The election, appointment and determination of officers and the auditors and advisors of the Company, the defining of their duties and functions and the salaries and remuneration to be paid to them will be a function of the board of directors. Until changed by the board of directors, the Officers of the Company and their annual salaries shall be: Office Held: Director: [NAME] [SALARY] Secretary: [NAME] [SALARY] All direct out-of-pocket expenses will be reimbursed provided these falls within guidelines set out by the Board of Directors from time to time. Until otherwise agreed, each officer of the Company will commit to spending his/her full time on the affairs of the Company. Until changed by the board of directors, the auditors and advisors of the Company shall be: Auditor: Legal Advisors: There shall be kept, in such bank or banks (including trust companies) as may be determined by the board of directors, bank accounts of the Company in which shall be deposited all monies received by the Company in the course of carrying on business from time to time. All payments on account of the Company shall be made by cheques drawn on the bank account and all cheques, drafts or other instruments drawn and made for the purposes of the business of the Company shall be executed by such directors, officers or employees as may from time to time be authorized so to do by the board of directors. Subject to paragraph 2.6, all decisions relating to the management and control of the business of the Company shall be determined by the board of directors of the Company, provided always that the following matters shall be determined by a Special Directors' Resolution: any capital expenditures greater than xxxx; any lease commitments greater than xxxx; the acquisition of any business interests by the Company; the elections of officers of the Company; the payment of any cash dividends or stock dividends to Shareholders of the Company; the issuance of any debt obligations of the Company; the disposal of the whole or any part of the business, undertaking, or assets of the Company outside the normal course of business of the Company the transfer of any shares of the Company; changes or variations in the objects or powers of the Company; the liquidation or winding up of the Company; the approval of any contracts or transactions outside the normal course of business; the execution of any contract involving a consideration greater than xxxx within the normal course of business; the lending of money by the Company; the guarantee by the Company of the debts or obligations of any other person, firm or body corporate; any non-budgeted expenditures greater than xxxx; business plan and/or budgets. The following decisions shall be determined by a Unanimous Directors' Resolution: alterations, variations or changes to the authorized or issued capital of the Company; the salaries and bonuses of officers and directors of the Company; the issue, redemption or purchase of any Shares; and changes in the number of directors of the Company The Shareholders may pledge any of their Shares as security for any borrowings by them provided the pledgee executes an agreement, in writing, providing that the pledgee shall be subject to all of the terms of this Agreement. The board of directors shall meet at least four times during each fiscal year of the Company. Any director can call a meeting provided 10 days notice is given. Notice may be waived. During the first year from the date of this agreement, the board of directors shall meet on a monthly basis. Directors may elect to attend a board meeting by telephone conference call. Each Shareholder shall, for so long as s/he is the owner of shares of the Company devote such of his/her business, time and energy as may be reasonably required to carry on the business of the Company and the Shareholder shall use his/her best efforts, skill and abilities to promote the interests of the Company. Each Shareholder agrees that he/she will not engage, without the consent of the other Shareholders, in a business which is directly competitive to that of the Company. Purchase for Investment","Shareholders Agreement","16",513,"https://templates.business-in-a-box.com/imgs/1000px/shareholders-agreement-D1016.png","https://templates.business-in-a-box.com/imgs/250px/1016.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#1016.xml",{"title":94,"description":6},"shareholders agreement",[96,98],{"label":17,"url":97},"business-legal-agreements",{"label":20,"url":99},"incorporation-agreement","/template/shareholders-agreement-D1016",{"description":102,"descriptionCustom":6,"label":103,"pages":104,"size":105,"extension":10,"preview":106,"thumb":107,"svgFrame":108,"seoMetadata":109,"parents":110,"keywords":117,"url":118},"SHARE PURCHASE AGREEMENT This Share Purchase Agreement (the \"Agreement\") is effective [DATE], BETWEEN: [FIRST PARTY NAME] (the \"Company\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [SECOND PARTY NAME] (the \"Testamentary Executor / Seller\"), an individual with his/her main address located at: [COMPLETE ADDRESS] AND: [THIRD PARTY NAME] (the \"Purchaser\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS the Seller is the owner of [NUMBER] common shares in the capital stock of the Corporation (the \"Shares\"); WHEREAS the [COMPANY NAME] hereto have determined that the fair market value of the Shares is [AMOUNT]; WHEREAS the Corporation desires to purchase for cancellation and the Seller desires to sell the Shares; WHEREAS there are no reasonable grounds to believe that: (a) the Corporation is, or would after the payment of the purchase price be, unable to pay its liabilities as they become due, or (b) the realizable value of the Corporation's assets would after said payment be less than the aggregate of its liabilities and the amounts required for payment on a redemption or in a liquidation of all shares the holders of which have the right to be paid prior to the holders of the Shares; WHEREAS the aforesaid purchase will result in a deemed dividend of [AMOUNT] for the purposes of the [COUNTRY] Income Tax [ACT/LAW/RULE]; NOW THEREFORE, IT IS AGREED AS FOLLOWS: SHARES PURCHASED AND PURCHASE PRICE Subject to the terms and conditions set forth in this Agreement, the Corporation hereby purchases for cancellation the Shares from the Seller, hereto present and accepting, and the Seller delivers to the Corporation certificates representing the Shares. The aggregate purchase price for the Shares is [AMOUNT] (the \"Purchase Price\") which the parties consider to be the fair market value of the Shares, payable as set forth in Article [NUMBER] hereof. PAYMENT OF THE PURCHASE PRICE Upon filing by the Corporation of the election as set forth in Article [NUMBER] hereof, the Corporation will issue to the Seller a certificate representing [NUMBER] common shares of the Corporation (the \"Common Shares\") and a promissory note in the amount of [AMOUNT] (the \"Promissory Note\") in full payment of the Purchase Price. The parties hereto determine that the Common Shares and the Promissory Note have a fair market value of and are, in all circumstances of the transaction, the fair equivalent of a consideration payable in cash equal to the fair market value of the Shares. SELLER'S REPRESENTATIONS AND WARRANTIES The Seller represents and warrants to the Corporation that: the Shares are owned by the Seller by good and marketable title; the Seller is a resident of [COUNTRY] for the purposes of the Tax [ACT/LAW/RULE]; ELECTIONS","Share Purchase Agreement Deemed Dividend","4",56,"https://templates.business-in-a-box.com/imgs/1000px/share-purchase-agreement_deemed-dividend-D342.png","https://templates.business-in-a-box.com/imgs/250px/342.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#342.xml",{"title":6,"description":6},[111,114],{"label":112,"url":113},"Finance & Accounting","finance-accounting",{"label":115,"url":116},"Buy & Sell Shares","buy-sell-shares","share purchase agreement deemed dividend","/template/share-purchase-agreement-deemed-dividend-D342",{"description":120,"descriptionCustom":6,"label":121,"pages":122,"size":89,"extension":10,"preview":123,"thumb":124,"svgFrame":125,"seoMetadata":126,"parents":128,"keywords":127,"url":131},"STOCK OPTION PLAN This Stock Option Plan (the \"Plan\") is given by [COMPANY NAME] (the \"Company\"), having its registered office at [SPECIFY ADDRESS] to its Employees. This Plan was approved and adopted by the Board of Directors and by the stockholders on [DATE]. STATEMENT OF PURPOSE [COMPANY NAME] has formulated this Plan, in furtherance of the corporate policy of the Company, for creating an environment conducive to higher growth opportunities for its Employees and the Employees of its Affiliates, and with a view to align the interests of such Employees and those of the shareholders by creating a common sense of purpose towards creating sustainable shareholder value. DEFINITIONS Administrator shall mean the Compensation Committee of the Board (or a subcommittee thereof) acting in its capacity as Administrator of the Plan. Applicable Laws shall mean the legal requirements related to the Plan and the option under applicable provisions of the securities laws of [STATE/PROVINCE]. Board shall mean the Company's Board of Directors. Company shall mean [NAME OF COMPANY]. Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the attached Exhibit A. Optionee shall mean the person eligible to avail the Stock Option Plan. Permanent Disability shall mean the inability of the Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or to be of continuous duration of [NUMBER OF MONTHS] months or more. Plan shall mean this Stock Option Plan. GRANT OF OPTION The Company hereby grants to the eligible person (the \"Optionee\") an option to purchase shares of Common Stock under the Plan. The date on which this option is granted (the \"Grant Date\"), the number of shares of Common Stock purchasable under this option (the \"Option Shares\"), the exercise price payable per share (the \"Exercise Price\"), the applicable vesting schedule by which this option shall vest and become exercisable incrementally for the Option Shares (the \"Vesting Schedule\") and the date to be used to measure the maximum term of this option (the \"Expiration Date\") are indicated on the attached Exhibit A to this Plan. The remaining terms and conditions governing this option shall be as set forth in this Plan. ELIGIBILITY FOR THE GRANT OF OPTIONS The criteria to be fulfilled by an Employee for being considered an Eligible Employee may be prescribed by the Committee from time to time. Only Employees fulfilling such criteria and who are not Disqualified Employees shall be considered Eligible Employees for the purposes of this Plan. An option can be granted only to an Eligible Employee who has been selected by the Committee. While selecting Eligible Employees for the award of grants and for deciding the number of options to be granted to such Eligible Employees, the Committee may be guided by the following considerations (i.e. eligibility criteria): Number of years of service Job profile and grade Performance rating or key result area appraisal Any other factors the Board of Directors or the Committee may deem appropriate. OPTION TERM The term of this option shall commence on the Grant Date and continue to be in effect until the close of business on the last business day prior to the Expiration Date specified in the attached Exhibit A, unless sooner terminated in accordance with this Plan. LIMITED TRANSFERABILITY This option shall be neither transferable nor assignable by the Optionee other than by will or the laws of inheritance following the Optionee's death and may be exercised, during the Optionee's lifetime, only by the Optionee. DATE OF EXERCISE This option shall vest and become exercisable for the Option Shares in a series of installments in accordance with the Vesting Schedule set forth in the attached Exhibit A. As the option vests and becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the last business day prior to the Expiration Date or any sooner termination of the option term. CESSATION OF SERVICE The option mentioned above shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: Except as otherwise expressly provided in subparagraphs 8.1.2 through 8.1.7 of this Paragraph 8, should the Optionee cease to remain in Continuous Service for any reason while this option is outstanding, then the Optionee shall have until the close of business on the last business day prior to the expiration of the [NUMBER OF MONTHS]-month period measured from the date of such cessation of Continuous Service during which to exercise this option for any or all of the Option Shares for which this option is vested and exercisable at the time of the Optionee's cessation of Continuous Service, but in no event shall this option be exercisable at any time after the close of business on the last business day prior to the Expiration Date. In the event the Optionee ceases Continuous Service by reason of his or her death while this option is outstanding, then this option may be exercised, for any or all of the Option Shares for which this option is vested and exercisable at the time of the Optionee's cessation of Continuous Service, by (i) the personal representative of the Optionee's estate or (ii) the person or persons to whom the option is transferred pursuant to the Optionee's will or the laws of inheritance following the Optionee's death. However, if the Optionee dies while holding this option and has an effective beneficiary designation in effect for this option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise this option following the Optionee's death. Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the close of business on the last business day prior to the earlier of (a) the expiration of the twelve (12)-month period measured from the date of the Optionee's death or (b) the Expiration Date. Upon the expiration of such limited exercise period, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised. Should the Optionee cease Continuous Service by reason of Permanent Disability while this option is outstanding, then the Optionee shall have until the close of business on the last business day prior to the expiration of the twelve (12)-month period measured from the date of such cessation of Continuous Service during which to exercise this option for any or all of the Option Shares for which this option is vested and exercisable at the time of such cessation of Continuous Service. In no event, however, shall this option be exercisable at any time after the close of business on the last business day prior to the Expiration Date. Except as otherwise precluded by Applicable Laws, should (i) the Optionee cease Continuous Service after completion of at least three (3) years of Continuous Service and (ii) the sum of the Optionee's attained age and completed years of Continuous Service at the time of such cessation of service equals or exceeds seventy (70) years, then the Optionee shall have until the close of business on the last business day prior to the expiration of the thirty-six (36)-month period measured from the date of such cessation of Continuous Service during which to exercise this option for any or all of the Option Shares for which this option is vested and exercisable at the time of such cessation of Continuous Service. In no event, however, shall this option be exercisable at any time after the close of business on the last business day prior to the Expiration Date.","Stock Option Plan","9","https://templates.business-in-a-box.com/imgs/1000px/stock-option-plan-D13284.png","https://templates.business-in-a-box.com/imgs/250px/13284.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13284.xml",{"title":127,"description":6},"stock option plan",[129,130],{"label":17,"url":97},{"label":17,"url":97},"/template/stock-option-plan-D13284",{"description":133,"descriptionCustom":6,"label":134,"pages":135,"size":89,"extension":10,"preview":136,"thumb":137,"svgFrame":138,"seoMetadata":139,"parents":141,"keywords":140,"url":146},"NON-DISCLOSURE AGREEMENT (NDA) This Non-Disclosure Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Disclosing Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [RECEIVING PARTY NAME] (the \"Receiving Party\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Receiving Party has been or will be engaged in the performance of work on [DESCRIBE]; and in connection therewith will be given access to certain confidential and proprietary information; and WHEREAS, Receiving Party and Disclosing Party wish to evidence by this Agreement the manner in which said confidential and proprietary material will be treated. NOW, THEREFORE, it is agreed as follows: NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Both Parties understand and agree that each Party may have access to the confidential information of the other party. For the purposes of this Agreement, \"Confidential Information\" means proprietary and confidential information about the Disclosing Party's (or it's suppliers') business or activities. Such information includes all business, financial, technical, and other information marked or designated by such Party as \"confidential\" or \"proprietary.\" Confidential Information also includes information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential. For the purposes of this Agreement, Confidential Information does not include: Information that is currently in the public domain or that enters the public domain after the signing of this Agreement. Information a Party lawfully receives from a third Party without restriction on disclosure and without breach of a non-disclosure obligation. Information that the Receiving Party knew prior to receiving any Confidential Information from the Disclosing Party. Information that the Receiving Party independently develops without reliance on any Confidential Information from the Disclosing Party. Each Party agrees that it will not disclose to any third Party or use any Confidential Information disclosed to it by the other Party except when expressly permitted in writing by the other Party. Each Party also agrees that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control. TERM The term of this Agreement is [number] of [years/months] from the date of execution by both Parties. TITLE The Receiving Party agrees that all Confidential Information furnished by the Disclosing Party shall remain the sole property of the Disclosing Party. DISCLAIMER","Non Disclosure Agreement Nda","3","https://templates.business-in-a-box.com/imgs/1000px/non-disclosure-agreement-nda-D12692.png","https://templates.business-in-a-box.com/imgs/250px/12692.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12692.xml",{"title":140,"description":6},"non disclosure agreement nda",[142,143],{"label":17,"url":97},{"label":144,"url":145},"Confidentiality Agreements","confidentiality-agreement","/template/non-disclosure-agreement-nda-D12692",{"description":148,"descriptionCustom":6,"label":149,"pages":135,"size":150,"extension":10,"preview":151,"thumb":152,"svgFrame":153,"seoMetadata":154,"parents":155,"keywords":160,"url":161},"TERM SHEET Issue: [Venture Capital FIRM] (\"VC\") and/or any member of its corporate group (\"the VC Group\") will purchase up to [AMOUNT] Series A Convertible Preferred Stock (\"Series A\") newly issued by [YOUR COMPANY NAME] (the \"Company\") at a price per share of [PRICE] (the \"Purchase Price\"). In addition, other investors shall purchase at least [AMOUNT] but not more than [AMOUNT] of newly issued Series A at the Purchase Price. The shares of Series A will be convertible at any time at the option of the holder into common shares of the Company (\"Common Stock\") on a one-for-one basis, adjusted for future share splits. The Purchase Price equates to a pre-money valuation of [VALUATION]. The calculation is based on [NUMBER] fully diluted shares of Common Stock. If the number of shares issued, or stock awards/options authorized increases before the closing the price per share for Series A Convertible Preferred Stock shall be reduced so that the pre-money valuation is unchanged. The Series A Convertible Preferred Stock shall be referred to herein as the \"Preferred Stock.\" Dividend: The Preferred Stock is entitled to an annual [AMOUNT] per share dividend, payable when and if declared by the Board of Directors, but prior to any payment on Common Stock; dividends are not cumulative. Liquidation Preference: The Series A will have a liquidation preference so that proceeds on a merger, sale or liquidation (including non-cumulative dividends) will first be paid to the Series A and will include a [%] per annum compounding guaranteed return calculated on the total amount invested. Upon completion of an additional round of funding of at least [AMOUNT] the compounding guaranteed return feature will expire. The liquidation preference will cease to operate if the proceeds due to Series A, on a merger, sale or liquidation on an as-converted basis, exceed the proceeds that would be due under the liquidation preference. Use of Proceeds: The funds raised by Series A will be used principally for general working capital purposes. Voting Rights: The holders of the Series A shall have the right to vote with the Common Stock on an as-if-converted basis. Redemption: If not previously converted, the Series A is to be redeemed in three equal successive annual installments beginning [DATE]. Redemption will be at the purchase price plus a [%] per annum cumulative guaranteed return. Pre-emptive Rights: Holders of the Preferred Stock will be granted rights to participate in future equity financings of the Company based upon their pro-rata, as-if-converted, ownership of the Company. Automatic Conversion: The Preferred Stock shall be automatically converted into Common Stock at the then applicable conversion rate (1:1 assuming no share splits) in the event of an underwritten public offering of shares of the Company at a total offering of not less than [AMOUNT] and at a per share public offering price of not less than three times the Series A purchase price per share, adjusted for splits. Anti-Dilution: Series A shall have weighted average anti-dilution, based on a weighted average formula to be agreed, for all securities purchased as part of this transaction (excluding shares, options and warrants issued for management incentive and small issues for strategic purposes of under [NUMBER] shares). Management Options: Simultaneously with this transaction, one million new shares shall expand the Company's management incentive stock option pool - bringing the total number of shares issued and stock incentives (awards and options) authorized to [NUMBER OF SHARES]. Rights of First Offer; Tag-Along: The Company and the Investors will have a right of first refusal with respect to any employee's shares proposed to be resold. Alternatively, the Investors will have the right to participate in the sale of any such shares to a third party (co-sale rights), which rights will terminate upon a public offering. Information Rights: Monthly actual vs. plan and prior year. Annual budget [NUMBER] days before beginning of fiscal year","Term Sheet",42,"https://templates.business-in-a-box.com/imgs/1000px/term-sheet-D473.png","https://templates.business-in-a-box.com/imgs/250px/473.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#473.xml",{"title":6,"description":6},[156,157],{"label":112,"url":113},{"label":158,"url":159},"Raising Capital","raising-capital","term sheet","/template/term-sheet-D473",{"description":163,"descriptionCustom":6,"label":164,"pages":135,"size":165,"extension":10,"preview":166,"thumb":167,"svgFrame":168,"seoMetadata":169,"parents":170,"keywords":173,"url":174},"ARTICLES OF INCORPORATION These Articles of Incorporation (the \"Agreement\") are made and effective [DATE], BY: [YOUR COMPANY NAME] (the \"Incorporator\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [REGISTERED AGENT NAME] (the \"Registered Agent\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] ARTICLES OF INCORPORATION OF [CORPORATION NAME] The undersigned subscriber to these Articles of Incorporation, a natural person competent to contract, hereby forms a corporation under the laws of the [State/Province] of [STATE/PROVINCE]. NAME The name of the corporation shall be: NATURE OF BUSINESS This corporation may engage in or transact any and all lawful activities or business permitted under the laws of [COUNTRY], the State of [STATE/PROVINCE], or any other state, county, territory or nation. CAPITAL STOCK The maximum number of shares of stock that this corporation is authorized to have outstanding at any one time is [NUMBER] shares of common stock having a par value of [VALUE] per share. ADDRESS The street address of the initial registered office of the corporation shall be: [ADDRESS] and the name of the initial Registered Agent for the corporation at that address is: [NAME] SPECIAL PROVISIONS The stock of this corporation is intended to qualify under the requirements of Section [NUMBER] of the [LAW OR CODE] and the regulations issued thereunder. Such actions as may be necessary shall be deemed to have been taken by the appropriate officers to accomplish this compliance. TERM OF EXISTENCE This corporation shall exist perpetually. LIMITATION OF LIABILITY Each director, stockholder and officer, in consideration for his services, shall, in the absence of fraud, be indemnified, whether then in office or not, for the reasonable cost and expenses incurred by him in connection with the defense of, or for advice concerning any claim asserted or proceeding brought against him by reason of his being or having been a director, stockholder or officer of the corporation or of any subsidiary of the corporation, whether or not wholly owned, to the maximum extent permitted by law","Articles of Incorporation",38,"https://templates.business-in-a-box.com/imgs/1000px/articles-of-incorporation-D998.png","https://templates.business-in-a-box.com/imgs/250px/998.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#998.xml",{"title":6,"description":6},[171,172],{"label":17,"url":97},{"label":20,"url":99},"articles incorporation","/template/articles-of-incorporation-D998",false,{"seo":177,"reviewer":190,"legal_disclaimer":194,"quick_facts":195,"at_a_glance":197,"personas":201,"variants":226,"glossary":252,"clauses":286,"how_to_fill":333,"common_mistakes":374,"faqs":399,"industries":427,"comparisons":444,"diy_vs_lawyer":458,"jurisdictions":471,"related_template_ids_curated":492,"schema":501,"classification":502},{"meta_title":178,"meta_description":179,"primary_keyword":180,"secondary_keywords":181},"Preferred Shares Capital Description Template (Free Word)","Free preferred shares capital description template for corporations. Covers dividend rights, liquidation preference, conversion, voting, and redemption. Free Word and PDF download.","preferred shares capital description template",[182,183,184,185,186,187,188,189],"preferred shares template","preferred stock description template","share capital description preferred shares","preferred shares agreement template","corporate preferred stock template word","preferred shares rights template","preferred share class description","equity capital template free",{"name":191,"credential":192,"reviewed_date":193},"Bruno Goulet","CEO, Business in a Box","2026-05-02",true,{"difficulty":196,"legal_review_recommended":194,"signature_required":194,"notarization_required":175},"advanced",{"what_it_is":198,"when_you_need_it":199,"whats_inside":200},"A Shares Capital Description — Preferred Shares is a binding corporate document that formally defines the rights, privileges, restrictions, and conditions attached to a class of preferred shares in a corporation's authorized capital structure. This free Word download gives you a structured, attorney-ready starting point covering dividends, liquidation preference, conversion rights, voting rights, and redemption terms — ready to incorporate into your articles of incorporation, shareholder agreement, or share purchase agreement.\n","Use it when incorporating a new entity with multiple share classes, when issuing preferred shares to investors in a seed or Series A round, or when amending an existing share structure to add or reclassify a preferred class. It is also required when updating a corporation's articles or charter to reflect capital changes approved by shareholders.\n","The template covers the full description of preferred share rights including cumulative or non-cumulative dividend entitlements, liquidation and dissolution preference over common shares, optional and mandatory conversion mechanics, anti-dilution adjustments, voting rights, redemption provisions, and the rank of the preferred class relative to other share classes in the capital structure.\n",[202,206,210,214,218,222],{"title":203,"use_case":204,"icon_asset_id":205},"Startup founders","Defining preferred share terms before closing a seed or Series A investment round","persona-startup-founder",{"title":207,"use_case":208,"icon_asset_id":209},"Corporate counsel and lawyers","Drafting or reviewing share capital descriptions for incorporation or amendment filings","persona-corporate-counsel",{"title":211,"use_case":212,"icon_asset_id":213},"Angel investors and VCs","Ensuring preferred share terms protect investment with liquidation preference and anti-dilution rights","persona-investor",{"title":215,"use_case":216,"icon_asset_id":217},"CFOs and finance directors","Documenting the capital structure for auditors, lenders, and future investors during due diligence","persona-cfo",{"title":219,"use_case":220,"icon_asset_id":221},"Small business owners incorporating","Setting up a two-class share structure to separate investor and founder equity from the outset","persona-small-business-owner",{"title":223,"use_case":224,"icon_asset_id":225},"M&A advisors","Reviewing or standardizing preferred share terms across target companies in an acquisition process","persona-ma-advisor",[227,230,233,237,241,244,248],{"situation":228,"recommended_template":7,"slug":229},"Issuing convertible preferred shares to institutional investors in a priced round","shares-capital-description-preferred-shares-D1017",{"situation":231,"recommended_template":232,"slug":229},"Describing common shares and their voting and dividend rights","Shares Capital Description Common Shares",{"situation":234,"recommended_template":235,"slug":236},"Governing all shareholder rights and share transfer restrictions","Shareholder Agreement","adhesion-to-the-unanimous-shareholder-agreement-D848",{"situation":238,"recommended_template":239,"slug":240},"Documenting the sale of preferred or common shares to investors","Share Purchase Agreement","share-purchase-agreement-deemed-dividend-D342",{"situation":242,"recommended_template":121,"slug":243},"Issuing shares to employees or advisors with vesting conditions","stock-option-plan-D13284",{"situation":245,"recommended_template":246,"slug":247},"Recording the initial share issuance at incorporation","Subscription Agreement","subscription-agreement-D12537",{"situation":249,"recommended_template":250,"slug":251},"Amending an existing share class after a new funding round","Share Capital Amendment Resolution","share-subscription-agreement-venture-capital-D344",[253,256,259,262,265,268,271,274,277,280,283],{"term":254,"definition":255},"Preferred Shares","A class of equity with preferential rights over common shares in dividends and on liquidation, typically issued to investors in exchange for capital.",{"term":257,"definition":258},"Liquidation Preference","The right of preferred shareholders to receive a specified return of capital before common shareholders receive anything in a sale, merger, or wind-up.",{"term":260,"definition":261},"Cumulative Dividend","A dividend that accrues unpaid year over year and must be paid in full to preferred shareholders before any dividend is paid to common shareholders.",{"term":263,"definition":264},"Non-Cumulative Dividend","A dividend that does not carry forward — if not declared in a given year, preferred shareholders lose the right to that year's dividend permanently.",{"term":266,"definition":267},"Conversion Right","The right of a preferred shareholder to convert their preferred shares into common shares at a defined ratio, typically exercisable at any time or triggered by an IPO.",{"term":269,"definition":270},"Anti-Dilution Adjustment","A mechanism that adjusts the conversion price of preferred shares downward when the company issues new shares at a lower price, protecting earlier investors from dilution.",{"term":272,"definition":273},"Participating Preferred","A preferred share structure where holders receive their liquidation preference and then also share in any remaining proceeds alongside common shareholders.",{"term":275,"definition":276},"Redemption Right","The right of the corporation or preferred shareholder to buy back preferred shares at a specified price after a defined date or triggering event.",{"term":278,"definition":279},"Voting Rights","The number of votes each preferred share carries, which may equal common shares on an as-converted basis or be limited to specific matters such as share class amendments.",{"term":281,"definition":282},"Drag-Along Right","A provision requiring minority shareholders, including preferred holders, to vote in favor of and participate in a sale approved by a majority of shareholders.",{"term":284,"definition":285},"Protective Provisions","Matters on which preferred shareholders hold a veto regardless of overall vote count, such as creating a new senior share class or paying dividends on common shares.",[287,292,297,301,306,310,314,318,323,328],{"name":288,"plain_english":289,"sample_language":290,"common_mistake":291},"Share Class Designation and Authorized Number","Names the class (e.g., Series A Preferred Shares) and states the total number of shares authorized in that class.","The Corporation is authorized to issue [NUMBER] shares designated as Series [A] Preferred Shares (the 'Preferred Shares'), with a stated capital of $[AMOUNT] per share.","Authorizing too few shares at incorporation — if the number is exhausted before a subsequent round closes, an emergency shareholders' meeting is required to authorize more, delaying the deal.",{"name":293,"plain_english":294,"sample_language":295,"common_mistake":296},"Dividend Rights","Sets the preferred dividend rate, states whether dividends are cumulative or non-cumulative, and defines when and how dividends are paid relative to common shares.","Holders of Preferred Shares shall be entitled to receive, when and as declared by the Board, cumulative preferential dividends at a rate of [X]% per annum on the stated capital per share, before any dividend is declared or paid on the Common Shares.","Omitting whether dividends are cumulative or non-cumulative. Courts and regulators in multiple jurisdictions treat the default differently, creating uncertainty that becomes a dispute in a future liquidity event.",{"name":257,"plain_english":298,"sample_language":299,"common_mistake":300},"Defines what preferred shareholders receive first in a dissolution, wind-up, sale, or deemed liquidation event — typically stated capital plus any accrued unpaid dividends — before common shareholders receive anything.","In the event of any liquidation, dissolution, wind-up, or Deemed Liquidation Event, holders of Preferred Shares shall be entitled to receive, prior to any distribution to holders of Common Shares, an amount equal to $[X] per share plus all accrued and unpaid dividends.","Failing to define 'Deemed Liquidation Event' to include a merger or acquisition. Without this definition, a sale of the company may not trigger the liquidation preference, leaving preferred investors unprotected.",{"name":302,"plain_english":303,"sample_language":304,"common_mistake":305},"Conversion Rights","Gives preferred shareholders the right to convert their shares into common shares at a defined conversion ratio, and specifies events that trigger mandatory conversion.","Each Preferred Share is convertible, at the option of the holder, into [RATIO] fully paid Common Shares at any time. Conversion shall be mandatory upon a Qualified IPO generating aggregate gross proceeds of not less than $[AMOUNT] at a price per share of not less than $[X].","Setting the mandatory conversion threshold too low. If a modest public offering triggers forced conversion before investors have recovered their preference, the protective value of the preferred class is eliminated.",{"name":269,"plain_english":307,"sample_language":308,"common_mistake":309},"Adjusts the conversion price of preferred shares downward if the company later issues shares at a price below the original conversion price, protecting earlier investors from dilution.","If the Corporation issues Common Shares or securities convertible into Common Shares at a price per share less than the then-applicable Conversion Price, the Conversion Price shall be adjusted on a [broad-based weighted-average / full ratchet] basis as set out in Schedule [A].","Using full-ratchet anti-dilution instead of weighted-average without understanding the consequence. Full ratchet can reduce the conversion price to the new low price, severely diluting founders and employees in a down round.",{"name":278,"plain_english":311,"sample_language":312,"common_mistake":313},"States the number of votes each preferred share carries — typically one vote per common share into which it could be converted — and identifies any matters reserved for a separate class vote.","Each holder of Preferred Shares shall be entitled to [one] vote for each Common Share into which such Preferred Share is then convertible, voting together with holders of Common Shares as a single class, except as otherwise provided herein or required by law.","Granting preferred shareholders super-majority voting power on all matters rather than restricting special votes to protective provisions only. This can paralyze routine corporate decisions when investor and founder interests diverge.",{"name":284,"plain_english":315,"sample_language":316,"common_mistake":317},"Lists specific corporate actions — such as creating a new senior share class, paying dividends on common shares, or amending the articles — that require approval of a specified majority or supermajority of preferred shareholders.","For so long as at least [X]% of the Preferred Shares remain outstanding, the Corporation shall not, without the prior written consent of the holders of at least [X]% of the outstanding Preferred Shares: (a) authorize or issue any shares ranking senior to or on parity with the Preferred Shares; (b) declare or pay any dividend on Common Shares; (c) amend the articles in a manner adverse to the Preferred Shares.","Making the protective-provision consent threshold so low (e.g., any single preferred shareholder) that routine corporate governance becomes subject to minority veto, making the company uninvestable for future rounds.",{"name":319,"plain_english":320,"sample_language":321,"common_mistake":322},"Redemption","Allows the corporation, the preferred shareholder, or both to redeem (buy back) the preferred shares at a stated price after a specified date or upon a triggering event.","At any time after [DATE], holders of not less than [X]% of the outstanding Preferred Shares may require the Corporation to redeem all or any portion of the Preferred Shares at a price per share equal to the stated capital plus all accrued and unpaid dividends, payable within [90] days of written demand.","Including a mandatory redemption clause without confirming the corporation will have sufficient available surplus to fund it. In many jurisdictions, a corporation may not redeem shares if it is insolvent or the redemption would render it insolvent.",{"name":324,"plain_english":325,"sample_language":326,"common_mistake":327},"Rank and Priority","States where the preferred class sits in the capital hierarchy relative to other existing or future share classes — confirming it ranks ahead of common shares and equal to or behind other preferred series.","The Preferred Shares shall rank: (a) senior to the Common Shares with respect to the payment of dividends and the distribution of assets on liquidation; and (b) pari passu with any other series of Preferred Shares designated by the Board unless otherwise specified in the applicable share description.","Omitting the ranking clause entirely and relying on order of share class creation. If a future series is created without an explicit ranking, litigation over priority in a liquidation is almost certain.",{"name":329,"plain_english":330,"sample_language":331,"common_mistake":332},"Participating Rights on Liquidation","Determines whether preferred shareholders receive only their liquidation preference or also participate in residual proceeds alongside common shareholders after recovering their preference.","After payment of the liquidation preference described herein, the remaining assets of the Corporation available for distribution shall be distributed pro rata among the holders of Common Shares and Preferred Shares on an as-converted basis [up to a maximum aggregate return of [X]× the stated capital per Preferred Share / without cap].","Granting fully participating preferred with no cap in early-stage rounds. At exit, this can reduce common shareholder (and founder) proceeds so dramatically that key employees become demotivated before closing.",[334,339,344,349,354,359,364,369],{"step":335,"title":336,"description":337,"tip":338},1,"Identify the share class and authorized number","Name the series (e.g., Series A Preferred Shares) and decide how many shares to authorize. Authorize at least 20–30% more than you plan to issue to accommodate option grants and future tranches without a shareholder vote.","Use a round number like 10,000,000 authorized — it simplifies the cap table math and is standard in venture-backed structures.",{"step":340,"title":341,"description":342,"tip":343},2,"Set the dividend rate and cumulation basis","Choose a dividend rate (typically 6–8% per annum for venture preferred) and explicitly state whether dividends are cumulative or non-cumulative. For most early-stage rounds, cumulative non-cash dividends that convert at exit are standard.","If dividends are cumulative, confirm your financial model can handle the accrual — cumulative dividends that grow for 5 years can materially reduce common-share proceeds at exit.",{"step":345,"title":346,"description":347,"tip":348},3,"Define the liquidation preference and deemed liquidation trigger","Set the preference amount per share (typically 1× stated capital) and explicitly define Deemed Liquidation Event to include mergers, asset sales, and change of control transactions above and below a threshold.","Include a carve-out for internal restructurings or same-entity reorganizations so routine corporate housekeeping does not accidentally trigger the preference.",{"step":350,"title":351,"description":352,"tip":353},4,"Set the conversion ratio and mandatory conversion threshold","The initial conversion ratio is typically 1:1 (one preferred to one common). Set the mandatory IPO conversion threshold at a price and proceeds level that reflects a genuine liquidity outcome — at least 3× the original issue price is common.","Confirm the conversion ratio interacts correctly with the anti-dilution formula — a weighted-average adjustment changes the effective ratio at conversion.",{"step":355,"title":356,"description":357,"tip":358},5,"Choose and document the anti-dilution mechanism","Select broad-based weighted-average anti-dilution for most rounds. Document the exact formula in a schedule attached to the description, including all share classes included in the 'fully diluted' base.","Exclude shares issued to employees under stock option plans from the anti-dilution trigger — including them would make routine option grants prohibitively expensive.",{"step":360,"title":361,"description":362,"tip":363},6,"Draft the protective provisions list","List every corporate action that requires a separate preferred-class vote, and set the consent threshold at 50–67% of outstanding preferred shares. Limit protective provisions to genuinely material actions to avoid governance paralysis.","Review every protective provision against your standard corporate calendar — if a routine board action lands on the list, remove it.",{"step":365,"title":366,"description":367,"tip":368},7,"Confirm redemption mechanics and solvency compliance","If including a redemption right, confirm the redemption date is at least 5 years from issuance and verify that applicable corporate statutes permit redemption from available surplus only. Add language voiding the obligation if the corporation would be rendered insolvent.","In Canada, the Canada Business Corporations Act and most provincial statutes prohibit redemptions that would leave a corporation unable to pay its liabilities. Include a statutory solvency carve-out by name.",{"step":370,"title":371,"description":372,"tip":373},8,"Integrate with articles of incorporation and shareholder agreement","Cross-reference the share description by title in the articles of incorporation and the shareholder agreement. Confirm that all three documents use identical defined terms for conversion price, liquidation event, and conversion ratio.","Inconsistent defined terms across the articles and shareholder agreement are the single most common source of investor-founder disputes at exit — run a definitions audit before execution.",[375,379,383,387,391,395],{"mistake":376,"why_it_matters":377,"fix":378},"Omitting the deemed liquidation definition","Without it, a sale of the company for cash may not trigger the liquidation preference, leaving preferred investors with no priority over founders in the most common exit scenario.","Define Deemed Liquidation Event to include any merger, acquisition, or asset sale representing more than 50% of the corporation's assets or voting control, and confirm the definition is cross-referenced in the shareholder agreement.",{"mistake":380,"why_it_matters":381,"fix":382},"Using full-ratchet anti-dilution without understanding the founder impact","Full-ratchet adjusts the conversion price to match the lowest subsequent issuance price, which can convert a modest down-round into catastrophic dilution for founders and employees.","Default to broad-based weighted-average anti-dilution for early rounds. Reserve full-ratchet only for specific tranches in highly negotiated term sheets where investors explicitly require it.",{"mistake":384,"why_it_matters":385,"fix":386},"Authorizing exactly the number of shares you plan to issue","If you exhaust the authorized preferred shares before the round closes or before a follow-on tranche, you cannot issue additional shares without calling a shareholder meeting and amending the articles — a process that can take 4–8 weeks and can delay or collapse a closing.","Authorize at least 1.25–1.5× the shares you intend to issue in the current round to provide a buffer for option conversion and additional tranches.",{"mistake":388,"why_it_matters":389,"fix":390},"Making all corporate actions subject to preferred-class protective provisions","Overly broad protective provisions mean preferred shareholders can block routine decisions — approving annual budgets, hiring executives, or entering standard vendor contracts — creating deadlock in day-to-day governance.","Limit protective provisions to capital structure changes, dividend payments on junior classes, related-party transactions above a threshold, and amendments to the articles or shareholder agreement that adversely affect the preferred class.",{"mistake":392,"why_it_matters":393,"fix":394},"Granting fully participating preferred with no cap in seed rounds","On a $10M exit with a 1× liquidation preference plus full participation, a preferred holder investing $3M at a 30% stake may recover $6M — nearly double the investment — while founders and employees share the remainder, destroying retention incentives before closing.","Cap participation at 2–3× the stated capital per share, or negotiate non-participating preferred (preference only, no residual sharing) in exchange for a higher preference multiple.",{"mistake":396,"why_it_matters":397,"fix":398},"Inconsistent defined terms across the articles, share description, and shareholder agreement","If 'Conversion Price' is defined differently in the articles than in the shareholder agreement, every conversion event becomes a negotiation — or a lawsuit — over which document governs.","Run a defined-terms audit across all three documents before execution. Where definitions differ, choose the most precise version and update all documents to match before signing.",[400,403,406,409,412,415,418,421,424],{"question":401,"answer":402},"What is a shares capital description for preferred shares?","A shares capital description for preferred shares is a formal corporate document that defines all the rights, privileges, restrictions, and conditions attached to a class of preferred shares in a corporation's authorized capital. It covers dividend entitlements, liquidation preference, conversion mechanics, voting rights, anti-dilution protections, redemption terms, and the rank of the preferred class relative to common and other share classes. It is typically incorporated into or attached to the corporation's articles of incorporation.\n",{"question":404,"answer":405},"What is the difference between preferred shares and common shares?","Common shares represent basic ownership with voting rights and a residual claim on assets after all other obligations are paid. Preferred shares carry preferential rights — they receive dividends before common shareholders and recover their capital before common shareholders in a liquidation or sale. Preferred shares are typically issued to investors while founders and employees hold common shares. In most startup structures, preferred shares are convertible into common shares at the holder's option or upon an IPO.\n",{"question":407,"answer":408},"When does a corporation need to create a preferred share class?","A corporation typically creates a preferred share class when raising capital from institutional investors, angel investors, or venture capital funds who require preferential protections in exchange for their investment. It is also used when splitting the ownership structure between founders (common) and investors (preferred) at incorporation, or when amending the capital structure to accommodate a new financing round that requires a senior or pari-passu share class.\n",{"question":410,"answer":411},"What is a liquidation preference and why does it matter?","A liquidation preference gives preferred shareholders the right to receive a specified amount — typically 1× their invested capital plus accrued dividends — before common shareholders receive any proceeds in a sale, merger, or wind-up. It matters because most startup exits occur through M&A rather than IPO, and at moderate exit valuations the liquidation preference can consume all or most of the proceeds, leaving common shareholders (founders and employees) with little or nothing. Negotiating the preference multiple and participation cap directly determines how proceeds are split at exit.\n",{"question":413,"answer":414},"What is anti-dilution protection in a preferred share description?","Anti-dilution protection adjusts the conversion price of preferred shares downward when the company issues new shares at a lower price than earlier investors paid, reducing the dilutive effect of a down round. The two main types are broad-based weighted-average (the most common and investor-friendly balance) and full-ratchet (the most aggressive, resetting the conversion price to the lowest new issuance price). Broad-based weighted-average anti-dilution is standard in most venture term sheets today.\n",{"question":416,"answer":417},"Do preferred shares always have voting rights?","Not necessarily. Preferred shares may have no voting rights, limited voting rights on specific matters only, or the same voting rights as common shares on an as-converted basis. In most venture-backed structures, preferred shareholders vote alongside common shareholders on an as-converted basis for routine matters, but hold a separate class vote on specific protective provisions such as creating a new senior share class or amending the articles in a way that adversely affects the preferred class.\n",{"question":419,"answer":420},"What are protective provisions in a preferred share description?","Protective provisions are a list of corporate actions that require approval of a majority or supermajority of preferred shareholders as a separate class, regardless of the overall shareholder vote. Common protective provisions include authorizing a new share class senior to existing preferred, paying dividends on common shares, selling all or substantially all of the company's assets, and amending the articles in a manner that adversely affects the preferred class. They function as a minority veto on matters most critical to investor protection.\n",{"question":422,"answer":423},"Is a shares capital description the same as a shareholders agreement?","No. A shares capital description defines the specific rights attached to a share class and is typically embedded in or attached to the corporation's articles of incorporation — making it a public corporate record in most jurisdictions. A shareholders agreement is a private contract among the shareholders and the corporation that governs transfer restrictions, drag-along and tag-along rights, board composition, information rights, and other governance matters. Both documents are needed in a complete venture financing and must use consistent defined terms.\n",{"question":425,"answer":426},"Does a shares capital description need to be filed with the government?","In most jurisdictions, yes. In the United States, the certificate of incorporation (or its equivalent) containing the preferred share description is filed with the secretary of state. In Canada, preferred share terms are set out in the articles of incorporation filed with the federal or provincial corporate registry. In the UK, the statement of capital and rights must be filed at Companies House. The document is therefore a public record — it is not a confidential agreement between private parties.\n",[428,432,436,440],{"industry":429,"icon_asset_id":430,"specifics":431},"Technology / SaaS","industry-saas","Series A and B preferred share structures typically include broad-based weighted-average anti-dilution, 1× non-participating liquidation preference, and automatic conversion at a qualified IPO — standard terms driven by NVCA model documents.",{"industry":433,"icon_asset_id":434,"specifics":435},"Biotech and Life Sciences","industry-healthtech","Long development timelines and high capital requirements often produce participating preferred with cumulative dividends, mandatory redemption rights after 7–10 years, and enhanced protective provisions covering clinical trial spend and IP licensing decisions.",{"industry":437,"icon_asset_id":438,"specifics":439},"Financial Services / Fintech","industry-fintech","Regulatory capital requirements may constrain the use of cumulative dividend preferred; redeemable preferred shares structured as quasi-debt are common in bank holding companies and require specific approval from prudential regulators.",{"industry":441,"icon_asset_id":442,"specifics":443},"Real Estate","industry-real-estate","Preferred equity in real estate joint ventures typically features a fixed preferred return (8–12% per annum), a waterfall distribution on exit, and redemption mechanics tied to asset sale proceeds rather than a conversion right.",[445,448,451,454],{"vs":87,"vs_template_id":446,"summary":447},"shareholders-agreement-D170","A shareholders agreement is a private contract governing relationships among shareholders — transfer restrictions, drag-along rights, board seats, and information rights. A shares capital description defines the legal rights of a share class and is embedded in the articles of incorporation as a public corporate record. Both are needed in a venture financing and must cross-reference each other, but they serve distinct legal functions and are governed by different legal regimes.",{"vs":239,"vs_template_id":449,"summary":450},"share-purchase-agreement-D171","A share purchase agreement governs a specific transaction — the sale of shares from one party to another, with representations, warranties, and closing conditions. A shares capital description is a standing document defining the rights of the share class regardless of who holds the shares. The purchase agreement references the capital description but does not replace it; both are required to complete a preferred share investment.",{"vs":121,"vs_template_id":452,"summary":453},"stock-option-plan-D172","A stock option plan governs the grant of rights to employees and advisors to purchase common shares at a future date. A preferred share capital description governs investor-held preferred shares with fixed rights and preferences. The two documents interact through the anti-dilution clause — option grants affect the fully diluted share count used in weighted-average anti-dilution calculations and must be carved out of down-round triggers.",{"vs":455,"vs_template_id":456,"summary":457},"Common Shares Capital Description","D{COMMON_SHARES_CAPITAL_ID}","A common shares capital description defines the basic voting, dividend, and residual rights of ordinary equity holders — typically founders and employees. A preferred shares description creates a senior class with preferential economic and governance rights layered on top of the common structure. Both descriptions must be incorporated into the articles together, with explicit ranking provisions confirming the preferred class sits senior to common in dividends and on liquidation.",{"use_template":459,"template_plus_review":463,"custom_drafted":467},{"best_for":460,"cost":461,"time":462},"Founders incorporating a two-class share structure for a straightforward seed round with standard 1× non-participating preferred terms","Free","1–2 hours to complete; 1–3 days for corporate registry filing",{"best_for":464,"cost":465,"time":466},"Seed or Series A rounds with institutional investors, participating preferred, or anti-dilution provisions requiring jurisdiction-specific calibration","$500–$1,500 for a corporate lawyer review","3–5 days",{"best_for":468,"cost":469,"time":470},"Series B and later rounds, complex multi-class capital structures, regulated industries, or cross-border issuances requiring securities law compliance in multiple jurisdictions","$3,000–$10,000+","2–4 weeks",[472,477,482,487],{"code":473,"name":474,"flag_asset_id":475,"note":476},"us","United States","flag-us","In Delaware — where most venture-backed companies incorporate — preferred share rights are set out in the Certificate of Incorporation and a Certificate of Designations filed with the Delaware Division of Corporations. The NVCA model documents provide widely accepted standard terms for Series A preferred. Securities law compliance (Reg D exemption) governs the sale of shares but not the description of share rights itself. State blue-sky laws vary and should be confirmed before issuance.",{"code":478,"name":479,"flag_asset_id":480,"note":481},"ca","Canada","flag-ca","Preferred share rights under the Canada Business Corporations Act (CBCA) or provincial equivalents (e.g., Ontario's OBCA, British Columbia's BCA) are set out in the articles of incorporation or articles of amendment filed with the relevant corporate registry. Redemption is restricted by statutory solvency tests — a corporation may not redeem shares if it is insolvent or if redemption would render it insolvent. Quebec civil law introduces distinct interpretive rules for share rights, and French-language filings are required for provincially regulated Quebec corporations.",{"code":483,"name":484,"flag_asset_id":485,"note":486},"uk","United Kingdom","flag-uk","Under the Companies Act 2006, the rights attached to a class of shares must be set out in the company's articles of association, a shareholders resolution, or the terms of issue — all of which are filed at Companies House and become public record. Variation of class rights requires a 75% supermajority of the affected class. The UK does not have a statutory anti-dilution mechanism — protection must be expressly drafted into the articles or subscription agreement. FCA financial promotion rules apply to communications related to share issuances.",{"code":488,"name":489,"flag_asset_id":490,"note":491},"eu","European Union","flag-eu","EU member states each have distinct company law frameworks governing preferred share rights — German GmbH structures, French SAS, and Dutch BV all treat preferred equity differently. The EU Shareholders Rights Directive II imposes transparency and voting requirements for listed companies, with limited application to private placements. Anti-dilution and liquidation preference terms are generally enforceable across member states but must comply with local mandatory capital maintenance rules. GDPR may apply to shareholder data held in corporate registers.",[493,240,243,493,494,495,496,247,497,498,499,500],"shareholders-agreement-D1016","non-disclosure-agreement-nda-D12692","term-sheet-D473","articles-of-incorporation-D998","board-resolution-approving-compensation-for-board-of-directors-D39","investment-agreement-D12703","convertible-note-agreement-D870","checklist-customer-due-diligence-D13916",{"emit_how_to":194,"emit_defined_term":194},{"primary_folder":97,"secondary_folder":503,"document_type":504,"industry":505,"business_stage":506,"tags":507,"confidence":513},"equity-and-mergers","agreement","general","all-stages",[508,509,510,511,512],"equity","preferred-shares","capital-structure","corporate-governance","shareholders",0.95,"\u003Ch2>What is a Shares Capital Description — Preferred Shares?\u003C/h2>\n\u003Cp>A \u003Cstrong>Shares Capital Description — Preferred Shares\u003C/strong> is a formal binding corporate document that defines all the rights, privileges, restrictions, and conditions attached to a class of preferred shares in a corporation's authorized capital structure. It specifies how preferred shareholders are treated in relation to common shareholders across four critical dimensions: economic rights (dividends, liquidation preference, and participation), conversion mechanics (voluntary and mandatory conversion into common shares, anti-dilution adjustments), governance rights (voting, protective provisions, and board representation triggers), and exit mechanics (redemption rights and deemed liquidation definitions). In most jurisdictions, this document is embedded in or attached to the corporation's articles of incorporation, making it a public corporate record rather than a private agreement.\u003C/p>\n\u003Cp>Preferred shares are the standard equity instrument used in venture capital and angel financing because they allow investors to negotiate specific protections — a priority return of capital, anti-dilution adjustments in down rounds, and veto rights over major corporate decisions — while still holding equity that converts into common shares at a successful exit. The shares capital description is the document that makes those protections legally binding and enforceable against the corporation and all current and future shareholders.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Without a clearly drafted preferred shares capital description, the specific economic and governance protections that investors negotiate in a term sheet have no legal standing once shares are issued. A handshake understanding of "1× liquidation preference and weighted-average anti-dilution" means nothing if those terms are not formally incorporated into the articles. When a sale or merger occurs, the distribution of proceeds is determined by what the articles say — not what the parties understood at the time of investment. Ambiguous or missing terms in the capital description become the basis for shareholder disputes, delayed closings, and, in the worst cases, litigation that consumes the very proceeds being distributed.\u003C/p>\n\u003Cp>For founders, a well-structured preferred share description protects the common share value that founders and employees hold. For investors, it is the legal foundation of their economic rights. For both parties, having a professionally structured template as a starting point — reviewed by counsel before filing — reduces the negotiation surface, speeds up incorporation and amendment filings, and ensures the document integrates cleanly with the shareholder agreement and share purchase agreement that accompany every serious financing round.\u003C/p>\n",1781185909975]