Most of the stockholders and the board member will be generally controlling the key result of each and every decision where there is a requirement for vote. Venture capital funds, where there is a typical ownership of minority positions, have key reliability over protective provisions with respect to corporate charter for blocking actions that cannot be supported and there is nothing wrong in perceiving protective provisions. They can be identified as the standard element related to basic covenant for entering the entrepreneur within the investor of venture capital (Baron, 2008). Mutual categories covered by negative rights of control are winding up or dissolution of the company, merger or sale of the company, amendment of the charter of corporation, disposition of the assets of the company, or creation or issue of pari passu or senior securities. This will further involve the payment of dividends, redemption of securities, borrow of money and change of several directors.
The ones holding common stock will hold the requirement of entering within an agreement with the ones holding the Series A Preferred with the provision of each and every such holder related to common stock. The others holding Series A Preferred will have the right of voting their shares that is favorable for the transaction, within which 50 per cent or more of the power of voting of the organization in transfer or any other liquidation being deemed. The approval of this is done by the holders of 50 per cent related to the shares outstanding on the basis of conversion of Series A Preferred. Cumulative dividends can be considered as most advantageous to the stock preferred and the burdens over common grounds. There is accruing of cumulative dividends over the original price being issued, and the payment is made typically in liquidating the startup and redeeming the stock being preferred. The dividends accrued tend to be representing an obligation of future related to the stockholders preferred further resulting in the reduction of available funds for the stockholders in common. There may be structuring of cumulative dividends in simple terms, where there is calculation of accrued dividend on original price of issue, but not over any previous unpaid and accrued dividends. Also, this can be done on the basis of compound in which every previous unpaid and accrued dividends are taken into consideration in order to determine dividends of the future. Other options include non-cumulative dividends and dividends on stocks preferred only when there is payment of common stock. There is payment of non- cumulative dividends on the stock preferred only if the declaration is made by the board of directors. If no declaration is made by the Board of Directors, then there is forfeiting of the same. This can be identified as a better structure significantly for the common holders of stock.