How to Add Conversion Rate for Preferred Shares?

The conversion rate is the number of common shares received per preference share. There are two instances when you can set the conversion rate for preferred shares: either while creating a preferred equity class or when editing an existing one.

Here are the steps to follow:

Step 1: Log into Eqvista and select your company.

On the dashboard, click “Securities” on the left to get a drop-down menu and then select “Equities”. 

Method 1: Create a New Preferred Equity Class

Let’s assume you want to add the conversion rate while creating an equity class to issue preferred shares.

Step 2: On this page, you can view all the equity classes created in your company. Here, click on “Create New Class” to create a new equity class for preferred shares.

Step 3: Then, you will be directed to the next page, where you can begin the process of adding the conversion rate by choosing the kind of shares – common shares or preferred shares. In this case, we selected the preferred option for adding the conversion rate.

Step 4: Once you have selected the option preferred, input the details: class name, pre-money valuation, conversion rate, and liquidity preference. 

Note: If liquidity preference is selected “Yes”, you need to fill in additional details. To further understand the sections in detail, check out the support article here!

Fill in all the details and click on “Submit”.

Method 2: Editing Existing Preferred Equity Class

If you’ve already created a preferred equity class, you can edit the details to change the conversion rate.

Step 2: On this page, select the preferred equity class and click on “Actions” to get a drop-down menu. Then, click on “Edit Equity class” to edit the class details.

Step 3: Once you click, a new panel will appear where you can change the conversion rate, as shown below.

Once done, click on “Save Changes”.

Now, you can enable preferred conversion rate ownership under company settings to include the conversion rate of preferred shares in the calculation of fully diluted shares.

If you want to understand Eqvista’s features, check out our support articles or contact us!