Wilmington Startup Attorneys & Lawyers

Start-up companies often hope to attract employees and investors by offering them shares of stock in the company.  There are several different types of stock, but the two most important are preferred stock and common stock.  Founders and employees typically receive common stock. Investors usually receive preferred stock.

Companies may receive tax benefits if they issue both common and preferred stock.

What is Common Stock?

As the name suggests, common stock is the most common type of stock.  When people think of "stocks," they are usually thinking of common stocks. Owners of common stock --

• May be paid dividends, but that is not guaranteed

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Form S-3: What is it?

Form S-3 is a simplified securities and exchange form that registers securities for companies. In order to use Form S-3, certain criteria must be met. Form S-3 can be used by a company that qualifies, in order to register securities under the Securities Act of 1933, instead of using the original Form S-1.

Registrant Requirements

S-3 registration gives investors the right to demand that a company registers their shares using Form S-3. Form S-3 is a shorter registration form than Form S-1, which is used in an initial stock launch or IPO. Form S-3 can be used by a company one year after an IPO. 

In order to use Form S-3 for securities, your company must meet certain requirements:

• The compa

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Anti-Dilution provision is a clause that gives an investor the right to maintain the same percentage ownership of a company by purchasing a proportional amount of shares in the future when securities are issued.

Dilution: What Is It?

To understand what “anti-dilution” is, you must first understand the meaning of dilution.

The term, “dilution” refers to an event in which the shareholders’ ownership of a company is reduced due to the issuance of new shares in that particular company. The ownership percentage is decreased as the whole capital is increased, the concept is simple as that.

Dilution occurs when you issue new stock in a company. Consider an investor who owns 30 out of a company's 100 shares; technically, he owns 30 percent of the company.

Imagine the corporation

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What Is Unfair Competition?

Unfair competition occurs when another company uses wrong or deceptive business practices to gain a competitive advantage. The major category of unfair competition relates to intentional confusion of customers as to where the product came from, while the secondary category relates to unfair trade practices. Some of the most common forms of unfair competition include:

• Bait-and-switch selling technique, such as substituting a lower-cost product from a different brand for a more expensive, higher-quality product.  
• False advertising or making false claims about a product to promote it.
• Misappropriation or use of confidential information, such as stealing a competitor's special formulation or other trade secrets.
• Trade dress violation, or copying the physical appearance of a product an

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What Is Right of First Offer?

Right of first offer is an agreement that when an owner is ready to sell or lease an asset, the holder of the right of first offer gets the first chance to buy or lease the property within a given time frame. Once the holder has made the offer, the seller is able to accept or refuse the offer. If the seller refuses it, he or she can move on to a third party offer.

Right of First Offer: In Depth

Most commonly, right of first offer is used in contracts within the real estate market and in the selling and buying of businesses. Typically, the stipulation is included in a tenant-landlord contract and in businesses with business partners and investors.

The most practical reason to have right of first offer is for a commercial tenant. If the owner decides to sell, it would give the tenant a chance to make an offer. If accepted, this prevents the need for th

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