bgtit:
Also, if I bring a motion to the board of directors that we should all take our common stock and convert it to preferred then the board agrees then hell, that means less shares in one year. What is the conversion price on the shares, 610,000 shares becomes 610,000 common shares at what price with what type of dividend, since preferred usually carries a dividend with it?
#reply-5794150
No offense intended, but are you being deliberately obtuse?
It is true that those who control the majority of the stock, control the board and management. If they choose to run the company as their private piggy bank they can do so to the detriment of the minority shareholders. They can pay themselves outrageous and undeserved salaries, have the company pick up their expenses, sell the company's assets to themselves (at least in Nevada) at firesale prices, grant themselves stock options, etc. However, they CANNOT change the underlying legal rights associated with a share of common stock based upon who owns it.
To be absolutely clear, if insiders hold the same class of stock that non-insiders hold, and the insiders wish to convert their shares to some other instrument, then ALL shareholders of that class either must convert or at least be given the option to convert.
The conversion of insider shares to preferred stock is critical to the plan to "cleanse" the market, yet the plan is illegitimate on its face since only "insiders" are supposedly able to convert.
Considering the fact that you are advising or have advised the company, I am surprised that you have not informed them that one of the primary pillars of their strategy to eliminate the "short sellers" could bring forth a class action lawsuit by minority shareholders against management, the Board, and its advisors -- a suit with high probability of success. Of course, whether there will be any funds to pay damages is another issue.
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