Will explained, thank you

@Kevin Ahmir instablaster :)

@Bernard Njathi calls can be arranged at www.callDavidBarnett.com

My neighbour’s name is Brent. I do speak to him most days. Currently, there are no homes for sale on my street, but I’ll let you know.

I'm a big fan of the internet too.

@@DavidCBarnett My business grew and I wanted to register it as a company limited by shares. I literally had no starting point. You have no idea how much enlightenment I got from this video. Keep up the great work sir.

That is awesome! You may also check www.investlocalbook.com/ to learn more.

Thanks for the kind words Nemnem. I'm happy to help.

Yes, He is King David

I swear he explained it so nice but still can't understand. I think I will listen to this many times. I want to buy shares a friend is inviting me but I just don't get it how it will profit me

Thanks for the kind words! Be sure to sign up for my email list at www.DavidCBarnett.com if you don't want to miss any new videos.

Hey Rahul, I'm happy to help. Cheers.

gamers no1 sure. Whatever you want.

@@DavidCBarnett 2 questions What's the value of the share when you first buy it? And is dividends in the shares per month? Or per year?

I'm guessing you mean 'Can?'

Wow, thank you!

Thanks Mauricio!

It's 2023 and STILL the nicest explanation around! Lol

Spilcore. Thank you. To be sure and never miss anything I put out, just subscribe to the list at www.DavidCBarnettList.com Cheers.

Glad it was helpful Cg!

Preferred shares are a form of financing. When we talk about 'company shares' we're almost always referring to common stock. also called 'voting shares.' Options give someone the right to buy something at a pre-determined price. This would be an incentive to allow people to buy in. The more under-market the option price, the larger the incentive.

Doh! You figured out my super-secret business strategy!!! ;)

Geez! You’re making me blush Army.

Thanks Sunil. I do have a lot of videos. Please give me a hand by liking and sharing when you enjoy them. Cheers.

Much appreciated!

Thanks J!

Glad it was helpful! I appreciate the comment.

Thanks Vegan

Glad it was helpful!

Great to hear!

Awesome. If you ever have a specific case that you want to discuss you can always reach me at www.clarity.fm/davidbarnett

Well, If I was to invest $350k into a local microbrewery I'd be looking for about $105K/year in returns for the risk and then I'd be looking to leverage the position by adding debt... which you already have. Unless you can find a way to sell shares to beer lovers who don't look for any return on investment then you should be looking for other solutions to your problems. Like the fact that you invested $350K plus your own time and money and the business is just breaking even. The problem is not the capital structure. For example, you may need more sales and some amount of money to do a marketing campaign. In this case, you could find an investor to put in a much smaller amount of money to grow the sales and allow you to make more. The debt you have will work to magnify the return on equity. In almost every case, debt is cheaper than equity. Many businesses would be envious of the fact that you've been able to borrow for this business, especially since it's a startup.

Thanks

Thanks Currie.

Hey, that's a great topic. I'll add it to the list. Subscribe to the channel or my e-mail list at www.DavidCBarnett.com so you're sure not to miss it when it comes out.

True.

Glad it was helpful!

Thanks Andrew

I’m glad you found it clear. It’s always my mission.

You're welcome!

Glad it helped

Glad it was helpful!

You should see me in my superhero outfit.

Glad you liked it. Thanks for the kind words.

If you're into capital gains, it can be awesome.

@@DavidCBarnett you should teach about having a private company and do buys back with other private company’s to raise value. also teach becoming an accredited investor.

No problem Erick

Thanks Jesse.

Thanks Himanshu

Glad it was helpful! Don't forget to hit 'like' and subscribe to the channel.

If you’re interested in business and deals, be sure to subscribe to my email newsletter at www.DavidCBarnettList.com

Most welcome

Yup, duck and cover if you see me swinging my sling.

Thank you@@DavidCBarnett , now i got some of your business anointing let me go kill my Goliath. David , do you know if there is a limit to the authorization of preferred shares . or the authorization limit is for common shares ONLY ?

I'm not sure where you are and what the rules are in your jurisdiction. This would be something regulated by your state or national government. Where I live, corporations can issue whatever number of shares are stated in their incorporation documents, or even 'unlimited' if this is what the charter says. This would go for common, preferred, etc

@@DavidCBarnett , You are the Best Indeed . I believe this is a general rule , i needed a sounding board. i am waiting for my commercial attorney's to draft or amend my incorporation documents . so in the meantime i was doing my research to familiarize myself with the language so i can have a meaningful meeting and ask relevant questions to ensure the success of my LLC ( in South Africa we call them PTY) . Thank you once again for thanking the time and writing back to me.

Going public is a whole different thing. agreed.

@@DavidCBarnett and very political! Also your stock has to usually maintain a price above a dollar.

Glad it was helpful!

Thanks for liking Avtar.

@@DavidCBarnett I have some questions about this topic and on Plc companies where may I ask you this question sir ? Thank you

I can always be reached at www.clarity.fm/davidbarnett please be sure to indicate your location when requesting a call

@@DavidCBarnett ok thank you I am based in the uk at the moment but my gold mine project will be in the DRC

Glad it was helpful!

@@DavidCBarnett Can a company issue more shares at a certain price and buy another company in exchange for those shares?

If it's a publicly traded company, contact a stock broker. If it's private, then the owners would have to sell you some shares. It's not very common that they would do this unless they're running an employee stock program of some kind.

Most welcome

Glad it was helpful Taleb!

Thanks Akshat.

Well, owners control the board and are the directors and they give direction to management. If you own a company outside your knowledge, then either a parent was trying to set up something for you or maybe it’s some kind of fraud. I’d start by looking at the incorporation docs and see who registered it to begin with.

@@DavidCBarnett Yeah, I presume parents set it up. Shortly after that I presume it was abandoned, seized, or incorporated into some kind of trust. I found some CUSIP number that pointed towards a significant amount of assets, like an unbelievable amount. I don't know if it's mine or meant to be mine, I'm almost 40 and no one has contacted me for anything.

If there were three shareholders and you never wanted to add any more or never wanted to make any of the changes suggested in this video, then why not just have three shares? I have a client with this kind of structure. Three shareholders... three shares. This is the point of the video. The number of shares is completely arbitrary and is driven by the plans for the business.

@@DavidCBarnett so the number of shares is more or less just to make accounting easy.

Thanks for watching. Be sure not to miss anything new by joining the list at www.DavidCBarnettList.com

No problem Ludwig. Good luck in your business pursuits.

Thanks

Thanks Suzal

Thanks so much.

I'm available for people to chat at www.Clarity.fm/davidbarnett if you want to go over your situation.

Hi there, thanks for your kind words. I'm sure there are a lot of great teachers out there teaching those topics. Maybe I'll look again in a few years as a retirement project.

@@DavidCBarnett keep it up sir.. u r doing great.

Awesome. Glad to help.

Thanks for the great review!

There is a record called a share register which keeps track of who owns how many shares. If you add a new investor and sell them newly created shares, you just add this entry to the register.

You need to give yourself more shares at the same time as you create new ones for new investors. Watch my video about dilution here: kzfaq.info/get/bejne/fNqfmruKvamnYac.html You may also want to investigate different classes of voting shares like the owners of Magna International use. just google that and you'll find articles.

Thanks Ayaka

You're welcome.. go to www.DavidCBarnett.com and join my mailing list to get new videos like this one each week. -dave

The board of directors has to approve the issuance of new shares. When people invest, they will likely want to restrict your ability to do this in order not to be diluted in their ownership position. I don't know where you're located so you'll have to find your own info as this stuff can change from jurisdiction to jurisdiction. An experienced business attorney can help you locally.

Yes, you need to know what your plan is.

Absolutely. That's what the minute book is for. Make sure you know the local rules about corporation governance to be sure you are compliant.

Glad to be of help. Don't forget to go to www.DavidCBarnett.com and sign up for my email list so you don't miss any new videos.

Well, we're talking about small businesses here so what you describe may not always happen. If the business has been losing money, new investors might get in at a lower price. There are also circumstances where creditors can't be paid and accept to have their debts turned into shares. Small business shares aren't subject to the same price actions as publicly-traded stocks like you describe with monetary inflation because there is often no market for these securities.

@@DavidCBarnett That's right, I didn't consider a stock buy in at a time when business isn't growing. Very true. They can be seeking money when things aren't so great, but still, the sale of the newly created stocks should bring in more cash to the previous owners: so even though the most evaluation may be lower than the last and previous investors lose in generalv but they would gain in comparison wouldn't they?? Compared with if no nearly socks are created. PS. I missed a good point though that you mention now. 👍👌

Hi, The corporation in question is involved with long-term contracts with customers. If they created new companies, then they would have to re-qualify with their customers and insurance companies. The example was from an appraisal practice. If it were something like a tire shop then yes, they could just do an asset transfer to a new company, but in this case the entity and its contracts was the thing of value.

@@DavidCBarnett I see, thanks for the response. I've been binge watching your channel for a few days now, it's eye opening. I wish I was informed on these matters while in my university business school.

Learn even more by taking the online course at www.BusinessBuyerAdvantage.com Cheers.

Thanks Rakesh

The company and its owners are separate people. If a company buys back its own stock, the shares are 'torn up' leaving the outstanding shares as the only ones left.

How the shareholders relate to loan guarantees is based on the bank's policy. And usually it only matters at the point the loan is made. So, answer is... it depends.

My pleasure Tony

Media Matters LMAO

Herock Hernandez, Lol! I thought something happened to him... Ha ha

haha all good man. Great recovery. Excellent video. Thank you for posting this.

It just depends on what the investors will accept. This stuff is totally open to creativity, as long as the different parties agree.

The video demonstrates the issuance and cancellations of shares for admitting and removing shareholders. The value of the shares is addressed in other videos.

@@DavidCBarnett Great, please make some advance real scenario analysis by which people really get great help rather than the simple concept. Overall, I appreciate your videos and subscribe your channel, like it too.

Maybe a dumb question but am just wondering

The board of directors can do this. Good investors usually want seats on the board and an agreement that would let them control or decide if they wanted to agree to be diluted. See this video: kzfaq.info/get/bejne/fNqfmruKvamnYac.html

Hmm, you got shares for nothing and now you want to give them back so you can buy some by paying for them? Not sure I understand what you're trying to do or what your goal is. Maybe you should book a call and I can help you after asking a few questions. www.Clarity.fm/davidbarnett is where you can book a time.. Cheers and thanks for watching.

I work really hard to have small business people not think in terms of percentages. It actually causes blocks in how you think about the business and capital structure mentally. Nobody talks about their percentage ownership of Coca-Cola, for example. It's because the shares outstanding are always changing as they issue equity or do buybacks. In your question above, 'Why can't she just pay x for 6%?' That works fine if she's buying their equity and giving the money to the other owners. But what if the idea is that the money needs to go into the company? If she put her money into the company for 6 new percentage points of ownership, then now the company has 106% of owners interest. Which is actually fine. Watch the video again. Cheers.

@@DavidCBarnett Thank you for your explanataion

It depends on where you are but usually is just done with the minute book and share register. You may have to change something with the government if you're making him a director. My best advice to you is to seek legal counsel locally. This transaction may be scrutinized long into the future for tax or family law issues that you can't necessarily foresee today.

Glad it was helpful!

Wow, those are some pretty specific questions. I've done a video before on pre-revenue start-ups kzfaq.info/get/bejne/btWKetNiytDTZnk.html Your sweat equity question and the questions about selling part of the business would need some discussion so that I'm clear on what is going on. I recommend a call. Schedule it at www.clarity.fm/davidbarnett

hmmm, there are a lot of pieces missing for me to respond to this. If you want to talk to me and use a specific example, I'd recommend a call. You can arrange it at www.clarity.fm/davidbarnett

I recommend you speak to a securities attorney. I know these guys in Colorado... www.doidacrow.com/

Depends on how it was registered and the rules in the jurisdiction. In some places, you have to specify the number of shares the company can issue, in other places you can simply say 'an unlimited number of common shares' or list out the classes of shares. There is usually a method to adjust it after with some other kind of filing. Best to talk to an attorney in your jurisdiction who does corporate affairs.

@@DavidCBarnett so, which kind of shares do the owners of the company have... Common or preferred‽

You can put money into your corp by buying shares (adding capital) or by lending it money. Each has it's own tax advantages/issues in different countries. You need to run your plan by a local accountant. Cheers.

Hi, If you know you'll be issuing lots of shares, then make sure the company can issue an unlimited number. Capital gains are determined by the difference between the price a share is purchased at and the price you sell it at. Not how many are outstanding. As you add rounds of funding, the investors are increasingly going to have a say in how any new shares are created or sold. My advice is to begin with simplicity. If you put in money and time, maybe value the shares at $1 each and issue yourself enough to cover your investments. As soon as you bring investors onto the scene, the value, number, control etc will all start to change subject to your negotiations.

Ensuring I never have the option for ppl to take enough % to fuck me over u know

Like I see u can group you set rules in various classes and amounts etc

Looking into these issues has lead me to you. And I hope I can learn the info from the video. Either way I will learn more about what people think. So win win

Id even welcome a partnership for the right advise

The sooner someone can help me the better

Happy to help Louie

Well, you either have a mechanism for that in your sharelholder's agreement or you negotiate it. For example, you could offer to buy the shares for a certain amount but maybe also get financing from the seller so you pay over time. Also, the exiting shareholder could sell the shares back to the company for cancellation. This would grow the % ownership of the remaining owners. There are taxation pros/cons to a lot of these options so you'll need advice from a local CPA.

Thanks Ruttosh.