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Home Q&A Forum S corp and liquidation preferences?

Business

S Corp

North Carolina

Asked on Aug 9, 2023

S corp and liquidation preferences?

I am a business owner who recently incorporated as an S corporation. I am interested in learning more about liquidation preferences as I am considering bringing on additional investors to help fund the business. I want to understand the implications of liquidation preferences on my ownership and the rights of the new investors.

1 Attorney answer

Answer

Business

North Carolina

Answered 341 days ago

Nicholas M.

ContractsCounsel verified

Business Lawyer
Licensed in Connecticut, North Carolina, Rhode Island
Free Consultation

An S-Corp has some limitations here (such as no more than 100 share holders and only one class of stock). Depending on the control that you seek to retain in your business, you may want to transition to a full C-Corp, restructure preferred (voting) shares from equity shares, and manage your business governance (Board of Directors, Officers, Resolutions, etc.) in a way big investors will find compelling.

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