Here is the step by step guide on how to amend an equity class by increasing the reserved shares.
Step 1: Log into your account on Eqvista and select your company profile. On the dashboard, click on “Securities” from the left-hand side panel. A drop down menu will appear. Click on “Equity Share Class” as shown below:
Step 2: Once you click on “Equity Share Class”, you would be directed to the following page:
On this page, you would be able to see all the available equity classes in the company. And you can select the equity that you wish to amend.
In this case, we would click on “Class A” since we would like to increase the number of shares in the class. Based on which class of shares you want to edit, click on the name of the share class, as is done in this example.
Step 3: After clicking on the equity class “Class A”, we are directed to the following page.
You would be able to see all the details of the equity class on this page such as the equity type, the total shares reserved in the equity, the equity available for issuance, the reserved shares in the equity class for warrants or for options.
Then click on the button “Action with Security”. A small drop down menu will appear from which you can select the option “Edit Security Issuance”.
This option would allow you edit parts of the equity. In case you want to delete the share class, you can also select the option below the edit on that says “Delete Security”.
In this case, we would be clicking on “Edit Security Issuance” since we want to edit the number of shares in the class.
Note: You can also reduce the number of shares in an equity class. The next step will help you understand how to do it.
Step 4: By clicking on the option to edit the equity class, a pop-up dialogue box would show up as displayed below:
From the above, you can see that the field holds the number of shares that the class already has. Also, you would be able to see a message below the field that says, “0 shares already in use for this class. 5,000,000 more shares available to reserve for this class”.
Note 1: The first statement that says “0 shares already in use for this class” means that none of the shares in this class has been issued. If you are wondering about the number of shares that are already in the equity class, you can see the number in the field that you would be editing.
Here, you can either increase the number from 1,000,000 shares that are reserved in the equity class or reduce it to the number you are comfortable with. For you to be able to increase the shares, you can only increase the number of shares according to the number of shares that are still available in the company that can be added in any equity class.
Note: A company is made out of a specific number of shares, and you can only use that number of shares for any issuances. This means that you cannot use a larger number than the total number of shares that make out a company for issuing or for reserving in any equity class. To know how much is left in your company, you would see a note under the field of the shares reserved.
In the above image, you can see the message “5,000,000 more shares available to reserve for this class”. This means that the company has only 5,000,000 extra shares that we can add in an equity class and issue further. Hence, you can increase the number of shares in this class to 6,000,000 (where 1,000,000 shares is already reserved in the class and you add the 5,000,000 available shares to make it 6,000,000.)
With this clear, as we wanted to increase the number of shares, we increased the number to 2,000,000. This would increase the number of shares in the class from 1,000,000 to 2,000,000.
If we decided to use all the shares available which is 5,000,000 shares that the company has plus the 1,000,000 shares that the equity class holds, the class would have 6,000,000 shares in it. And with this, the company would not have any additional number of shares to add in any other equity class and issue further for the company.
Step 5: In this example, we are increasing the shares from 1,000,000 to 2,000,000 as shared in the screenshot below:
We edited the number of shares from 1,000,000 to increase it to 2,000,000 in the equity class. As soon as we changed the number, you can see that the message below has a lower number of shares available in the company for reserving in any equity class. It was 5,000,000 before and now it is 4,000,000.
Step 6: As soon as you have filled in the details, click on “Save”.
Once you click on save, you will be redirected to the following page. Here, you would be able to see the amendments that you have just made. In this case, we increased the number of shares from 1,000,000 to 2,000,000.
In case you want to edit any other details like the date of the issuance or so on, or if you want to reduce the number of shares in the class (as far as the shares have not been issued to anyone yet), you can follow the same steps mentioned above.
Note: You cannot reduce the number of shares in the class once the shares have been issued to someone and there are no available shares in the class for further issuance.
After you have edited the number of shares and reserved the amount needed, you can begin issuing shares to shareholders now from this equity class.