Erica Frank

9 Sept 2013
Matty Groves, Inc.
To the tune of: Matty Groves, traditional ballad (one version available at
https://www.youtube.com/watch?v=1it7BP5PckI, but the full song is much longer).
For equity, for equity
The fiscal year to fund
The Matty Groves investment plan
No longer could be shunned.

Conversion rights allow a change:

Preferred to many common,
Redemption rights can force their pay
Without resort to lawmen. 3

But how to grow the Matty Groves

And how to make it thrive?
To bring its value up from low,
And reach its peak so high?

The stock can carry voting rights

Of many varied types
Seats on the board, or extra votes,
Or veto of their dislikes. 4

The articles will authorize

The different types of stock 1
And with a plan to publicize
Investors soon will flock.

Matty Groves had a CFO

Who ne'er was caught asleep
He knew the tricks of the finance trade
A wiz at the spreadsheets.

The founders and their friends may have

Some common stock in shares
And some may vote and some may not 2
And that is just and fair.

He shoved the data right and left

And up and down the rows
He counted all the assets up
And saw how they could grow.

Uncommon stock is called "preferred"

And it grants rights and clout:
Convert, redeem, and veto votes
In shares all parceled out.

If you would grow slow and sure

Common stock's your path.
Control each share, and have no care:
Avoid all public wrath.

2F

3F

0F

1F

If you would grow more fast and bold,

Preferred stock is the way.
Draw investors in huge crowds
By granting rights for pay.

Schneeman 421: Articles of incorporation specify the

types of stock authorized; if none are mentioned,
common stock is considered the default.

Shneeman 421: Owners of common stock get one

vote per share; nonvoting common stock may
also be issued.

Norton 1: Conversion rights avoid dilution by

allowing a preferred share to be exchanged for
many common shares; redemption rights can
force repurchase, although this often has a time
delay requirement or is not available in early
investment rounds.

Norton 1: Preferred stock can contain many kinds of

voting rights.

And if you would grow bigger still

Then public you could be
List all the actions of your till
For anyone to see.

"I'll take that stock if it's preferred

With dissolution rights.
My future gains may be deferred
But they'll come back some night."

The SEC is long of arm

And writ with many rules;
If public you would be by choice,
I pray you, be not fools.

"And if this comp'ny goes to hell

I shall be paid back first.
And if it grows so very well
Then I shall be no worse."

Matty Groves, Inc, had much to think

And would consider all
And as they measured all the plans,
Their debtors came to call.

So Matty Groves distributed

And the CFO, he swore
For all the work was his by bid;
He typed 'til he was sore.

"Pay up, pay up," the debtors cried

"Pay up or head to court;
By cash or assets, no damn tricks
We won't take naked shorts." 5

He wrote up each certificate

Named Matty Groves and the state,
Then wrote in the recipient
And described the rights and rates 6

"We won't pay up; we can't pay up;

We've no cash for amends,
But if you'll take some shares of stock
You will get dividends."

And then he brought them to the board

To be signed, two by two 7
To be released out in the world
To their investors new.

4F

5F

6F

Then Matty Groves the market joined

And loudly made the call
And issued stock as it had coined
For profit to them all.

"Naked Shorting" 1: Illegal sales of shares that may

not exist.

Schneeman 431: Stock certificates must contain the

name of the issuer, the state of incorporation, the
name of the issuee, the number and class of
shares and series label, if any.

Schneeman 432: Stock certificates must be signed

by two officers, often the president and secretary.

Frank 3
Works Cited
"Definition of Naked Shorting." Investopedia. ValueClick Inc, 2013. Web. 4 Sep 2013.
<http://www.investopedia.com/terms/n/nakedshorting.asp>
Norton, Eric. "Understanding the Difference Between Common Stock and Preferred Stock
Equity Financing for Startups." A Blog For Business Owners. Norton, Petersen &
Furumoto LLP , 11 Jul 2013. Web. 2 Sep 2013. <http://npfllp.com/understanding-thedifference-between-common-stock-and-preferred-stock-equity-financing-for-startups/>.
Schneeman, Angela. The Law of Corporations and Other Business Organizations. Sixth Edition.
Clifton Park: Delmar, Cengage Learning, 2013. Print.