Ownership Type Categories and Related Characteristics

Here is a synopsis of ownership types used within Corporate Focus:

  1. Stock – The Stock category is non-derivative (direct) ownership with transferability. It is used for all types of non-convertible ownership that do not require vesting.
  2. Other – The Other category is non-derivative (direct) ownership with transferability, and can have vesting schedules. It is primarily used for issuing vesting restricted stock direct from authorized shares; but also works great for LLC membership units that have a vesting component. This category includes automatic repurchase of unvested shares upon termination of the Participant.
  3. Convertible – The Convertible category is derivative (indirect) ownership that converts into another Type at a specified conversion ratio and has transferability. It reserves shares of the converts-into type for future conversion of the shares. It is possible to change certain terms of the ownership type such as conversion ratio after initial setup and have the system update the records to reflect the new information.
  4. Option – The Option category is derivative (indirect) ownership which has vesting capabilities, is not transferable, and can be exercised into another Type at a specified price within a specified time frame. It has an expiration date that can automatically expire the option if not exercised prior to that date. This category includes automatic cancellation of unvested shares upon termination of the Participant.
  5. Warrant – The Warrant category is derivative (indirect) ownership which may have vesting capabilities, is transferable, and can be exercised into another Type at a specified price within a specified time frame. It has an expiration date that can automatically expire the warrant if not exercised prior to that date.
  6. Note – The Note category is for convertible debt instruments that calculate simple interest over a term and mature on a fixed date or time period, with transferability. This category converts into another Type based on a conversion price and interest calculated through the conversion date. The conversion Type need not be defined immediately. It is possible to change certain terms of the ownership type such as interest rate or maturity date after initial setup and have the system update the records to reflect the new information.
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