Share Class Liquidation Preferences
In an event of any liquidation, the preferences indicate the order that investors get paid and how much they receive. Information regarding a company's liquidation preferences can be found in the company's Certificate of Incorporation.
To fill out this information, navigate to 'Shares' under Securities. Then click the drop-down next to 'Manage Share Classes' and select 'Create share class.'
Seniority Level: Indicates the order in which the holders will get paid. Seniority ranks low to high, with 1 being the highest. The higher the number, the less seniority that share class has.
Original Issue Price: Price that was originally set for that series of preferred stock.
Conversion Price: If the preferred shares convert to common stock, this would be used to calculate the conversion ratio for the preferred stock into common stock. Typically, the conversion price is equal to the original issuance price.
Conversion Ratio (optional): Can be seen in the cap table in the "fully diluted" column. By default, it is calculated by dividing the Original Issue Price by the Conversion Price. If a value is entered here, it will override the default calculation.
Multiplier: The multiple of the original Issue price that will be paid out pursuant to the liquidation preferences.
Non-cash dividend: Indicates whether the investors will be receiving non-cash dividends, such as shares. The annual percentage rate of the investment that is paid back to the investor in additional shares. Select whether the non-cash dividend will be 'Non-Cumulative' or 'Cumulative'. This information is not reflected in the capitalization table.
Participating preferred: Indicates if the holders of that class of preferred stock are paid out at the time that the common stockholders are paid out as well as during the payout based on their seniority level (pursuant to the liquidation preferences).
Participating preference cap: If a preferred share class is marked as participating preferred, this field indicates a maximum limit to the payout participation of the preferred stockholders in the payout to the common stockholders.