lowtrade

[lowtrade]

Is the 9.99% ownership restriction a sec regulation across the board or simply standard practice for toxic financing agreements

simply standard practice for toxic financing agreements?

Say There is no 9.99% clause in the filing of the agreement, Would they be required to convert and sell the shares a portion at a time on the 10% basis or could they convert everything and hold that 50% stake in the o/s?

they could convert everything and hold that 50% stake in the o/s

The result would be an almost 50% stake in the parent company.

This is where management would need to have a poison pill in place to protect ownership. Say a huge amount & discount warrant or option award, to the CEO or board member.

Remember we're talking OTC correct. Things work differently at the big boards. Where poison pills are used for hostile takeovers. And at the OTC, poison pills are used to maintain startup ownership.

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On the OTC, most funding debit conversion rights are 9.99% to help alleviate the need for a poison pill. That 9.99% is negotiated during funding. And something management requests from the VC. It can be any amount. I've seen 7.77% and 5.55% also.