You have a preferred ownership share in the company. No way to know what preferences you have without looking at the paperwork, but generally preferred shares have priority in liquidation, dividends, etc. over common shareholders.
The shares may or may not be convertible into common shares. Again, you need to look at the documents.
All corporations must issue stock. If the firm is privately held, then there is really no market for the stock since it is not on an exchange. Preferred means that it may have a higher par value (guaranteed value) than common stock, and also be ahead in line of common stock should the company declare bankruptcy.
In theory, the more successful the company is, the better off you will be. However, since there is no market price established, you have no idea. Plus, small companies can screw you - I was a pretty big investor in a brewery, and then their management (since they owned over half the stock) voted to issue 3X more shares than were outstanding to give to employees as a bonus. So my shares immediately became worth 1/4 of what they were.
I hope they didn't give this to you instead of wages. Contact the lawyer and have him explain
it to you. Ask him what the value of it is. Ask if it can be sold. Ask when the company will
go public.
I was like an angel investor in my friend's company when they were starting out. I made a small contribution to them initially. I recently received a Series A Preferred Stock certificate from their lawyer recently.
Since the company is not yet public, I am not clear as to what does this certificate mean to me. Will this certificate only matter if the company goes public or does it even apply if the company is bought by some other company?
Can anyone please help me understand this?
Thanks in advance,
Kenny
