Non-voting means that the shares do not have any voting rights associated with them. Traditionally, common shareholders vote during shareholders meetings to appoint and confirm the Board of Directors. The Board of Directors are the representatives of the shareholders who oversee the company. They are responsible for hiring the CEO and determining the long term direction and vision of the company. With small companies, the board of directors is usually quite small, and is made up of the core founding members. As these individuals are also usually the largest shareholders, they are on the board to lead the company they founded and ensure it follows their vision. Equity crowdfunding and the addition of potentially thousands of new shareholders can complicate things for a small company that initial had only a few shareholders.
To keep matters simpler for both founders and small crowdfunding investors, most companies issue non-voting shares when raising on Equivesto. This gives the initial founders comfort that they remain in control of the company they created, and this keeps investing simpler for smaller investors, who don’t need to be wrapped up in complicated corporate governance requirements. Soliciting investor votes or proxies can also be an expensive process when small shareholders often ignore shareholders meetings and votes anyway.
Some companies issue voting shares to new investors but create multiple voting shares for the controlling group. This means that individual investors do have a vote, but they can be outvoted by the controlling shareholders voting together. In the case of a dispute within the controlling group, the single vote shareholders may decide the issue.
Furthermore, while each offer is unique, it is rare for companies to offer more than 50% of their shares as part of an investment campaign on Equivesto. As a result, control of the company already remains with the original investors, who, even in a scenario with voting shares, have enough power to decide the direction of the company regardless.
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