The concentration of voting power may also discourage unsolicited acquisition proposals. This concentrated control will limit or preclude the Series A holders from having an influence over corporate matters for the foreseeable future, including the election of directors, amendments of the certificate of incorporation and by-laws and any merger, sale of all or substantially all the assets or other major transaction requiring stockholder approval. Rowe Price - will continue to control a majority of the combined voting power, and therefore be able to control all matters submitted to stockholders for approval. Although the general rule in Delaware is that each share receives one vote, a corporation may provide in its certificate of incorporation that a particular class or series has limited or no voting rights.īecause of the ten-to-one vote ratio between Dropbox’s Class B and Class A, the Class B stockholders – basically the co-founders and lead VCs Sequoia, Accel and T. Class A shares (offered to the public) are entitled to one vote per share, Class B shares are entitled to ten votes per share and Class C shares have no voting rights, except as otherwise required by law.

Dropbox’s S-1 shows that its capital structure consists of three classes of authorized common – Class A, Class B and Class C – with the rights of the holders of all three classes being identical except with respect to voting. Having submitted its registration statement confidentially in early January, Dropbox finally filed its S-1 publicly on February 23. I blogged about Snap’s IPO here.ĭropbox, Inc. is now the latest to go public with a multi-class structure.

Snap then took them to a new level last year when it acknowledged (or boasted) that it was the first company to launch an IPO with shares having zero voting rights. Popularized by the Google IPO in 2004, weighted voting rights have since been featured in the high profile IPOs of LinkedIn, Groupon, Zynga, Facebook, Fitbit and Blue Apron.

Dual or multi-class capitalization structures generally allow companies to sell large amounts of shares to the public while maintaining control in the hands of the founders and early investors.

What is dropbox cost structure