Is there a way the company can sell additional stock without the partners losing control of the business?
To obtain additional capital to fund the expansion, the company is considering another stock offering. But the original partners do not want to lose voting control of the business. Mention the kinds of capital stock the company could issue that would accomplish this.
This is a very interesting question and a good one. The original partners could issue limited voting stock, or non voting stock, in. a proportion which would keep them with over 50.01 percent of the total stock voting participation. In Silicon Valley, they often issue dual class stock as a way to keep founder control of the company- look at Facebook or Google as examples. I hope this helped answer your question.
I would need a lot more information to be helpful. If you have an S-corporation, your options are more limited. As long as the original partners have control of at least 51% of the stock, you’ll keep control. You would have more flexibility as an LLC filing as a partnership. I strongly recommend you discuss this with your company’s CPA and a business attorney.
Yes. But you will have to work within the rules of your corporate structure.
If you are an S-Corp you will need to create non-voting shares of stock and you can issue these. When it comes to distributing profits, every shareholder will receive a proportionate amount, whether they are allowed to vote or not. In this case, even if 80% of the issued stock are non-voting shares, the 20% owned by the founders will be enough for them to control the company.
A C-Corp can do the same, but also has the flexibility of issuing other types of shares, including Preferred. Once again, you will need to decide what your objectives are and then review the best strategy with your corporate attorney.
The same is true for an LLC; another structure that is very flexible with regard to your purposes, but should also be considered with your attorney.