A corporation is owned by its shareholders. The corporation can create different kinds of ownership shares. That is, not all shareholders need own the exact same thing. Those different kinds of ownership are called classes.
The different classes of ownership have different rights and preferences. Very typically, those rights and preferences include the obligation (if any) of the corporation to pay dividends, how much those dividends need to be, what happens in the case of business failure (liquidation), what happens if the company is sold, and the right to vote.
Classes of ownership establish a pecking order between shareholders in the case of certain events.
As of June 19, 2015 iConsumer has two classes of stock.
Preferred Class A
The following is meant to be a simple explanation. For a binding / legal interpretation, see a lawyer.
iConsumer’s Preferred Class A is the class of shares owned by investors, employees, advisors, and members. It is the class of stock you get when you earn shares because of earning Bitcoin rebates.
It has three important features.
1) Dividend preference. The Company cannot issue dividends to the Common shareholders unless it issues the same or better dividends to the Preferred Shareholders. That is, Preferred Shareholders have a preference over Common Shareholders when it comes to dividends.
2) Liquidation preference. As of January 12, 2018, this preference was eliminated for shares that after that date. For shares issued before that date, the preference remains so long as the original shareholder still has them on the books of our transfer agent. The preference is: Should the company be liquidated, Preferred Class A shareholders get their money back first, before the Common Shareholders. Once all shareholders get their money back (equal to the amount they paid for the stock), and once the Common Shareholders get the money they paid for their stock back, then anything over that is divided equally among all shareholders.
This gives Preferred Class A Shareholders a preference (they’re higher in the pecking order) over the Common Shareholders in case iConsumer fails.
3) Voting rights. Preferred Class A shareholders do not have voting rights, except where absolutely required by State of Delaware law. It is possible that iConsumer will have millions of Preferred Class A shareholders. Needing that many people to be involved in voting is unmanageable.
This kind of separation of voting rights is typical among newer technology companies (e.g. Google, Facebook) and even older companies like Ford Motor.
iConsumer’s Common Class A is the class of shares owned by the founder, Robert Grosshandler. It is subordinate to the Preferred, except that this class of stock has voting rights. Most meaningfully, this means that the owners of this class elect the Board of Directors, who in turn hire or fire the managers of iConsumer.