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Nasir and Matt talk about Google's new class of stock that has no voting rights, as well as how to bring on investors without losing equity in the company. Full Podcast Transcript NASIR: Welcome to Legally Sound Smart Business. This is Nasir Pasha. MATT: And this is Matt Staub. NASIR: And welcome to Episode 28. MATT: Yeah, we’re really getting up there in the numbers. This is impressive now. NASIR: Very good. I’m really excited for this episode today. We’re talking about classes of stock with Google. MATT: Yeah, I’m just going to get right into this. So, this is with Google Stock and it’s kind of interesting. You can have classes of stock as a corporation – at least as Google has it here. This is their new C class that just got issued. But the thing here is the shareholders for this class of stock are going to have zero voting rights at the annual shareholders’ meetings. NASIR: Yeah, I mean, pretty much no rights. I assume maybe they get dividends at the least, right? But they really strip down any kind of benefit of actually owning the stock other than just the speculation of the ownership of the company and buying and selling the actual stock. MATT: You know, the dividends is a good point. I don’t know if it even mentions that in here but, yeah, I would think they’d have to get dividends at least or else… NASIR: I don’t know if Google issues dividends or not. MATT: Yeah, that’s true as well. But, anyway, this class is not voting and, you know, thinking about it more macro, if the people that had Class A shares, for example, or B, I mean, their votes really don’t matter in the whole scheme of things, especially when the main people have I think here 55.7 percent. So, they have the majority. They can still do whatever they want to do. But I guess I get the point of having these as non-voting just because they don’t want to dilute that 55.7 percent anymore but as long as they kept the majority, I don’t see what the big deal is. NASIR: From what I was reading, the reason is that the Class A stock which is a voting stock – well, both Class A and B are voting stock – Class B is really the one that matters because each share is worth ten votes and you can do that. You can have different classes where you want to retain control. And so, even if you don’t own a majority of the company – even though, in this case, they do – your vote is the one that matters. Class A stock must be used by Google to issue to basically their employees for a stock option and things like that. You know, it makes sense. If they want to keep doing that, eventually, they’re going to be diluted to a point where they don’t have control. I guess, in theory, that’s the perspective that they’re coming with so that they don’t have to worry about this kind of issue. But I think it’s an important lesson for other companies because different classes of stock is not only in corporations. You can have different voting rights and different levels of interest and other entities as well – whether it’s a limited partnership or LLC. To me, it’s a main point of how to retain control and to give different rights to maybe investors or non-investors or founding partners versus later employees. MATT: The question of the week here that’s coming up actually kind of deals with this as well but I did want to touch on a couple more things. I thought it was funny how the shareholders tried to stop this or object to it and they voted. They got 180 million votes in favor of a resolution that was going to call for equal voting rights which is by far the most they’re had – is it triple the amount of any other measure that was voted on? But they said the majority has 551 million votes so not even close to reaching that. NASIR: And that was just between two people – Larry Page and I forgot the other responder’s name. MATT: That was pretty funny but, basically, the point I was making earlier was that, at the end of the day, an individual’s vote doesn’t really matter that muc...