Quoted from the Series 66, 2.4.4
Several years pass and the company needs to raise additional capital. They still have 500,000 authorized shares to sell, so let’s say they decide to sell all of them. This action would dilute your 10% ownership down to 5%.
Question: Does it ever happen where a company ONLY offers rights to their investors to raise more capital? Maybe the company doesn’t need to raise that much money, or they think they can raise enough by only offering shares to their current majority shareholders? Are there regulations in place that say that if a company sells more authorized shares, that they must also offer them in an APO?
Thanks for your help!