Frequently Asked Questions

We've collated a number of the most common questions we get about organizational rights management, cap tables, document management, and more!

O.R.M. - Ownership Rights Management

What is an ORM?

Ownership Rights Management (ORM) is a technology for managing all your organizations relationships and interactions between owners, and all other parties that the owners of the organization are in agreements with, or may enter into agreements with.

The goal is simple: Improve organization agreements. An ORM system helps organizations stay connected to governments, vendors, employees, and customers, streamline collaborative decision making and improve profitability.

When people talk about ORM, they are usually referring to an ORM system, a tool that helps with contact management, equity management, ownership rights management, collaborative productivity, and more.

An ORM solution helps you focus on your organization’s relationships with individual people and entities — including customers, service users, colleagues, or suppliers — throughout your lifecycle with them, including finding new customers, winning their business, and providing support and additional services throughout the relationship, hiring and firing of employees and contractors, and managing relationships with owners, shareholders and investors.

How Preferred Stock Works

Cap tables can get complicated quickly making Pro-forma and scenario analysis near impossible unless built right from the start. Preferred stock can be complicated and to start lets breakdown how preferred stock works in different common scenarios.

If you have preferred stock on your cap table, do you really know how preferred stock affects your equity? Do not get surprised when it’s too late to go back in time and make changes. Make sure you have it all figured out early.

Understand the mechanics of preferred stock is critical starting with the most widely used preferred terms, what they mean, and how they work.

Liquidation Preference

Preferred securities usually always have a liquidation preference. This means that preferred stockholders have a right to get their money back before anyone else. Preferences are usually expressed as a multiple of the amount of capital invested. If the preferred stock has a “1x” liquidation preference, then preferred shareholders are entitled to receive an amount equal to one time(s) their investment before other shareholders receive any of their investment back.

Usually, if shareholders elect to receive their liquidation preference, they lose their right to participate with the rest of the shareholders. Liquidation Preferences usually only play out in a downside, failed, or negative scenario as a protective measure. In any good scenario, the preferred shareholders will choose to participate according their ownership (pro rata) if the company sells for a profitable amount more than their original investment.

This simple example show’s how this plays out. Suppose a VC Investor bought 100,000 shares of Preferred stock for $5.00 per share, and the Preferred stock has a 1x liquidation preference. Assuming that you own 100,000 shares of common stock, here is what the cap table would look like:

ShareholderPreferredCommon% Ownership
VC Investor100,000050%

If the company sold for $650,000, my 1x liquidation preference entitles me to $500,000 of proceeds. This means there’s $150,000 left for you, even though we both own 50% of the company.

Now, suppose that the Preferred stock has a 2(x) liquidation preference. The VC Investor owning the 100 shares of Preferred stock is now entitled to one million dollars of the exit proceeds before you get anything even though the VC only invested $500,000. Using the same exit example scenario of $650,000, the VC gets 100% of the proceeds and you get nothing. A liquidation preference of more than 1(x) is less common but does exist.

Now in the original example let us explore when the Preferred stock has a 1(x) liquidation preference when your company sells for $1,500,000. If the VC Investor chose to take the liquidation preference, the VC Investor receives $500,000 of the proceeds, and you get $1,000,000. In this case, the VC would choose to lose the liquidation preference and instead would rather split the proceeds according to our ownership (50/50)so both shareholders get $750,000 each.

What is the value to the owners of Preferred stock with liquidation preference? In one word it is Protection. The value is in protecting the shareholder in a downside scenario. The risk of betting on entrepreneurs, who may have little to no real money invested in the company, is very high, and the liquidation preference is one way to offset some amount of the risk as a trade-off for protection.

Participation Rights

Participation rights mean that in addition to taking the liquidation preference, preferred stockholders also participate pro rata in the remaining amount to be distributed in a liquidation scenario.

This example will show us using our same cap table from above, only now the Preferred stock has a 1x liquidation preference and participation rights. If the company sells for $1 million, the liquidation preference again entitles the VC to $500,000 right off the top, which leaves $500,000 left for you.

Because the VC has participation rights, the remaining $500,000 is split between you and the VC based on the overall outstanding ownership percentages of (50/50). This means the VC now gets an additional $250,000 and you get $250,000. In total the VC will get $750,000 and will you get $250,000.

Participation rights (also sometimes called “double dipping”) can add additional upside to the owner of the preferred while still allowing for additional protection. Why would investors get this kind of privilege? In this scenario it becomes even more important that both the common shareholders and the preferred shareholders equally understand the rights and how they affect different scenarios.

Participation Cap

A participation cap can be an additional component of the participation rights. The Cap is the limit on the amount of proceeds an investor can receive from participation rights. The term Participation Cap can also be expressed as a multiple of the invested capital. Simply put, this is a hard cap on the amount of additional upside the participation rights can participate in.

For example, if the Preferred stock has participation rights and a 3x participation cap, and there was a liquidity event; then if the preferred shareholders exercised their liquidation preference, and also participate in the remaining proceeds distributed pro rata, they would receive an amount equal to three times their invested capital.

Furthering the example, assume the company sold for $2,750,000. In this scenario, the VC would take their $500,000 liquidation preference, then they would start to participate in the remaining amount pro rata. However, the VC has participation rights that are capped at 3 times their invested capital, so they max out at $1,500,000 in distributions, and then you get your $1,250,000 distribution after their payout.

Disqualified ISO

What is the Difference Between Qualified & Disqualified Incentive Stock Option(ISO)

Incentive stock options are most commonly used to invest workers in their company's success. A stock option is a right that is granted that allows the owner of the option the ability to buy a quantity of a company's stock at some point in the future at the current price per share.

This motivates the worker to help improve the company towards a rise in stock value. Qualified and disqualified ISO's promote the same incentive principle, but with a couple of practical and important tax-related differences.

Qualified Incentive Stock Options

A "qualified" ISO allows you to escape personal taxation of any profit made in the exercising and subsequent sale of the ISO's. This comes in the form of two separate tax savings. At the point the option is exercised, you are exempt from paying tax on the gain between the option-grant price (when the option was issued), and the time-of-exercise-price of the stock(when the shares are purchased).

Secondly, at the time you sell the stock, the profit on the sale qualifies for taxation as a long-term capital gain, usually a lower rate than personal income.


An ISO must meet two holding criteria to qualify for tax breaks:

1) An ISO is disqualified if it is sold less than two years after the date the option was granted. This disqualification obligates you to pay tax on the spread between the exercise and market prices.

2) An ISO is also disqualified if it is sold less than one year after the date of exercising. Profit is then taxed as earnings rather than a capital gain.

Non-Qualified Incentive Stock Options.

A "disqualified" ISO may not have any tax savings, and may take a double hit on taxes. The spread between issue and exercise prices is taxed at your regular income rate in the year of exercising.

For example, an option for 1,000 shares at $1 per share will cost you $1,000 to exercise. If stock currently trades at $2 a share, you are taxed on the $1,000 spread as though it were income. The same is true if you sell your stock within a year of exercising the option to purchase the shares. Twelve months after the date of exercising it becomes taxed as a capital gain.


Favorable tax treatment comes at a cost of increased risk for qualified ISOs. Conditions for qualified sale of the stock can be met in a minimum of two years from the time of issue. Thus, a quick profit on a fast turnaround of options is tempered by the increased tax burden.

While there can be substantial tax savings on qualified stock options designed for long term holding, the risk of the stock price decreasing may or may not be favorable to the holder of the options.


What is GDPR?

  • GDPR is the European Union’s General Data Protection Regulation. It officially goes into effect in May 25, 2018. The goal of GDPR is to protect the personal data of all individuals within the EU from consumption or use by unauthorized parties.

Where can I find more information on GDPR?

Why does GDPR matter?

  • GDPR impacts all companies with global operations. Companies based in the US are not exempt from GDPR, as any data originating in the EU is subject to the regulation.

What are we doing to be compliant?
We are proactively building privacy tools. Specifically, we are:

  • Building more robust privacy controls to better protect user data.
  • Establishing a framework to evaluate and update privacy controls for pre-existing features and every new feature that we add.
  • Creating systems to facilitate requests about inaccurate data, and to provide user data that is kept within Equa.
  • Communicating with our vendors and customers about the efforts and changes we are making to better protect our user data.
  • We are a participant in the Privacy Shield organization.

If you have questions please email
This page/post should not be considered legal advice.

What is KYC/AML?

KYC or 'Know Your Customer' is defined as the process of identifying a customer's identity through the verification of ID documents like a driver's license or passport.

AML or 'Anti Money Laundering' refers to steps taken by financial institutions and governments to prevent money laundering and terrorism.


Set up your organization with customized workflows to define and improve the efficiency of the actions your shareholders, owners, employees, investors, and partners will take.

Actions are a key product in our Collaborative Consensus productivity suit.

What is the Equa Rewards Program?

About Equa Rewards

Equa Rewards is one way in which Equa endeavors to reward and thank loyal Equa Member-Clients. Member-Clients who join Equa Rewards using one of the mechanisms described below (“Equa Rewards Members”) will be able to earn “Equa Cash” that may be redeemed for Equa Rewards benefits (“Rewards”) and may be eligible to receive certain additional benefits.

Joining Equa Rewards

To be eligible to join Equa Rewards in accordance with these Terms of Use, you must be 18 years of age or older at the time you join Equa Rewards. 

There are several ways to join Equa Rewards and begin accumulating Equa Cash as described below: 

  • Create a new Equa Member-Client account at
  • Refer new Member-Clients to Equa.
  • Download the Equa Start mobile app to your Android™ or iPhone® device and follow the prompts to create an Equa Rewards Account. 
  • Join Equa Rewards and create an Equa Rewards Account through a special promotion, membership or other program that may be offered by Equa. There may be additional terms and conditions applicable to these promotions and programs, so please read them carefully.

Equa Rewards Account Registration

The Equa Rewards registration process may require that you provide the following information: username, password, email address, physical address in the United States, telephone number, birthday, name, and marketing preferences. You may register and have only one (1) Equa Rewards Account that is personal to you. In the case of a business or legal entity, you can only register and have one (1) Equa Rewards Account per business or legal entity. You must provide complete and accurate information in registering your Equa Rewards Account and promptly update that information if it should change.

Your Equa Cash and your Equa Rewards Account may not be sold, transferred or assigned to, or shared with, family, friends or others, or used by you for any commercial purpose. Any Equa Cash held in an Equa Rewards Account may not be combined with Equa Cash held in any other Equa Rewards Account.

Earning Equa Cash

The Rewards that are available to you through Equa Rewards are based on the amount of Equa Cash that you earn.

Additional Methods for Earning Equa Cash 

  • Equa Cash Codes. Equa Cash codes (“Equa Cash Code”) may, from time to time, be distributed through promotional materials, which would allow you to earn Equa Cash by redeeming such Equa Cash Codes within the Equa Platform Application. The amount of Equa Cash awarded per Equa Cash Code may vary. You may redeem a maximum of two (2) Equa Cash Codes per day and may earn up to 100 Equa Cash per year by redeeming Equa Cash Codes. Certain other limitations may apply to Equa Cash Codes, including, but not limited to, Equa Cash Code expiration dates. Check the promotional materials for specific restrictions applicable to a particular Equa Cash Code.
  • Promotional Bonus Equa Cash Offers. From time to time, Equa May offer you special promotions that offer you additional Equa Cash (“Bonus Equa Cash”). The promotional Bonus Equa Cash will be awarded as described in the applicable promotional offer and will be subject to any additional terms set forth in such promotional offer. 
  • Affiliate Programs. Eligible Equa Rewards Members may earn Equa Cash through participation in programs offered by our business affiliates. Equa Start does not operate and is not responsible for these programs, which have separate and additional terms and conditions governing how Equa Cash may be earned. 

Exclusions to Earning Equa Cash 

You may not earn Equa Cash in connection with certain types of beta or promotional programs.

When Equa Cash is Added to Your Equa Rewards Account

Generally, Equa Cash is automatically added to your Equa Rewards Account within twenty-four (24) hours of when it was earned.

If you void a payment made to Equa, Equa will deduct the Equa Cash that you earned for that payment, potentially resulting in a negative Equa Cash balance on your Equa Rewards Account.

Equa Cash Expiration

Equa Cash accrued in your Equa Rewards Account will expire twelve (12) months after the calendar month in which such Equa Cash was earned. For example, if you earn Equa Cash on April 5, 2019, it will expire on May 1, 2020.

The oldest accrued and unexpired Equa Cash will be used first for redemptions. You can view and track your Equa Cash balance and available Rewards, as well as any additional benefits for which you are eligible by using the Equa mobile app. 

Equa Cash Redemption

As an Equa Rewards Member, you are eligible to redeem Equa Cash for Equa services designated by Equa as part of Equa Rewards.

For Equa Cash redemption purposes only, each Equa Cash shall be equal in value to one (1) U.S. Dollar. However, Equa Cash can only be redeemed for Equa services; Equa Cash cannot be redeemed for cash, unless required by law.

Additional Benefits of Equa Rewards

As an Equa Rewards Member, you are eligible for the following additional benefits: 

  • Anniversary Reward.
    • On the anniversary of the formation (incorporation or organization with a Secretary of State) of your Equa Start company, you will receive twenty (20) Equa Cash (“Anniversary Reward”).
    • To qualify for your Anniversary Reward, you must join Equa Rewards at least seven (7) days prior to the anniversary and provide your anniversary information in your Equa Rewards Account information.
    • Your Anniversary Reward will be automatically added to your Equa Anniversary Account on your anniversary as long as you are an eligible Equa Rewards Member.
    • If you provided Equa with a current, valid email address in your Equa Rewards Account information and have not opted out of receiving promotional emails, you will receive a reminder email from Equa approximately one (1) to three (3) days prior to your anniversary indicating that your Anniversary Reward is available to you. You also may receive a notification within the Equa mobile app. You can check to see if you’re Anniversary Reward is available by accessing your Equa Rewards Account on or in the Equa mobile app. 
  • Personalized offers and coupons.
    • Special offers may be distributed by email, through the Equa mobile app (including via push notifications), or by physical mail. You may be required to opt-in and activate special offers via the Equa mobile app or via email.
    • In order to receive and activate personalized special offers distributed via email, you must opt-in to receive promotional and marketing offers from Equa and you may be required to provide a valid email, telephone and physical address.

Equa reserves the right to change the number and type of additional benefits offered to Equa Rewards Members in its sole discretion at any time.

How does the Equa Rewards Program work?

You must create an Equa Rewards account in order to receive and redeem Equa Cash on the Equa Start platform. Equa Cash is valued at a 1:1 value of USD but may only be used for Equa services within the platform. Get $10 to $100 of Equa Cash here for free when you create a free account.

How can I earn more Equa Cash?

There are multiple ways to earn Equa Cash. Some of them include, participating in promotions, inviting your friends, and taking advantage of our affiliate program. Be sure to follow us on our social channels. 

How do I redeem Equa Cash?

When you become an Equa Start client you can redeem Equa Cash and apply it toward your subscription fee.

Note: Equa Cash is only valid for Equa products and services at this time.

What is the Equa Affiliate Program?

Eligible Equa Rewards Members may earn Equa Cash through participation in programs offered by our business affiliates. Equa does not operate and is not responsible for these programs, which have separate and additional terms and conditions governing how Equa Cash may be earned. To learn more about all available affiliation agreements contact us here.

What is Equa Transfer?

Equa Transfer is a transfer agent service that helps maintain your financial record keeping obligations.

What is a Transfer Agent?

A transfer agent maintains up-to-date ownership records of a corporation's securities. They also facilitate transfers of a corporation's stock and other assets, including convertible notes and bonds.

What is a Capitalization Table (Cap Table)?

A “Cap Table” (short for “Capitalization Table”) is a document, typically in the form of a spreadsheet or table, that offers a snapshot of an organization's equity capitalization and total market value.  

Cap tables aim to capture shareholder equity and other sorts of information including common equity shares, preferred equity shares, warrants, and convertible equity, et al.. With this, cap tables become a vital decision-making tool for assessing equity ownership, market capitalization, and potential market value.

Fully Diluted Shares

Fully Diluted (FD) Shares

“Fully diluted”(FD) shares are the total number of common shares of a company currently issued or outstanding plus all shares that could be claimed through the conversion of issued convertible preferred stock, Convertible Instrument's and the exercise of outstanding options and warrants.

The calculation of “fully diluted” shares helps an individual stock owner determine their “fully diluted” ownership percentage, which is the number of common shares owned by that owner divided by the total fully diluted shares, assuming all outstanding potential dilution events. This calculation captures the total pool of potential common shares.

What is Corporate Governance?

Corporate governance is the system of rules, practices, and processes by which an organization is directed and controlled. Corporate governance essentially involves balancing the interests of all stakeholders of an organization, including customers, the community and the government. Equa is passionate about empowering excellent governance for all of our organizations.

Understanding Corporate Governance

Governance refers specifically to the set of rules, controls, policies, and resolutions put in place to dictate corporate behavior. Proxy advisors and shareholders are important stakeholders who indirectly affect governance, but these are not examples of governance itself. The board of directors is pivotal in governance, and it can have major ramifications for equity valuation.

An organizations corporate governance is important to investors since it shows a company's direction and business integrity. Good corporate governance helps companies build trust with investors and the community. As a result, corporate governance helps promote financial viability by creating a long-term investment opportunity for market participants.

Communicating a firm's corporate governance is a key component of community and investor relations. On Apple Inc.'s investor relations site, for example, the firm outlines its corporate leadership—its executive team, its board of directors—and its corporate governance, including its committee charters and governance documents, such as bylaws, stock ownership guidelines and articles of incorporation.

Most organizations strive to have a high level of corporate governance. For many shareholders that have invested in companies, it is not enough for a company to merely be profitable; it also needs to demonstrate good corporate citizenship through environmental awareness, ethical behavior, and sound corporate governance practices. Good corporate governance creates a transparent set of rules and controls in which shareholders, directors, and officers have aligned incentives.

Corporate Governance and the Board of Directors

The board of directors is the primary direction setter responsible for influencing corporate governance. Directors are elected by shareholders or appointed by other board members, and they represent shareholders of the company. The board is tasked with making important decisions, such as corporate officer appointments, executive compensation, and dividend policy. In some instances, board obligations stretch beyond financial optimization, as when shareholder resolutions call for certain social or environmental concerns to be prioritized.

Boards are often made up of inside and independent members. Insiders are major shareholders, founders, and executives. Independent directors do not share the ties of the insiders, but they are chosen because of their experience managing or directing other large companies. Independents are considered helpful for governance because they dilute the concentration of power and help align shareholder interest with those of the insiders.

The board of directors must ensure that the company's corporate governance policies incorporate the corporate strategy, risk management, accountability, transparency, and ethical business practices.

Bad Corporate Governance

Bad corporate governance can destroy confidence in a company's reliability, integrity, or obligation to shareholders—all of which can have implications on the firm's financial health. Tolerance or support of illegal activities can create scandals like the one that rocked Volkswagen AG starting in September 2015. "Dieselgate" revealed that for years, the automaker had deliberately and systematically rigged engine emission equipment in its cars in order to manipulate pollution test results, in America and Europe. Volkswagen saw its stock shed nearly half its value in the days following the start of the scandal, and its global sales in the first full month following the news fell 4.5%.

Public and government concern about corporate governance tends to wax and wane. Often, however, highly publicized revelations of corporate malfeasance revive interest in the subject. For example, corporate governance became a pressing issue in the United States at the turn of the 21st century, after fraudulent practices bankrupted high-profile companies such as Enron and WorldCom. The result of this in 2002 was the passage of the Sarbanes-Oxley Act, which imposed more stringent record-keeping requirements on companies, along with stiff criminal penalties for violating them and other securities laws. The aim was to restore public confidence in public companies and how they operate.

How does Equa Start ensure security?

Equa Start ensures security by delivering end-to-end encryption and strict permissioned access to your organization's documents, cap tables, and stakeholder transfers.

How are the Equa Start document templates created?

The library of document templates available on the Equa platform have been created by skilled attorneys who understand the nuances of business formation and the interests of each party involved. Collectively, our attorneys have written, reviewed and approved the tools offered here so you can save money on legal fees. Equa does not restrict clients from granting permissions to outside attorneys of your choice to assist in customizing documents for your specific businesses.

What is Equa Sign?

Equa Sign allows you to make important decisions through a voting process, similar to a corporate board meeting. Equa Sign simplifies the process by obtaining alignment on important decisions by preventing delays. All votes occur instantaneously within the Equa platform, and this can happen regardless if stakeholders are physically present at a meeting location.

What is Scenario Analysis?

Scenario analysis is the process of estimating the expected value of a portfolio after a given period of time, assuming specific changes in the values of the portfolio's securities or key factors take place, such as a change in the interest rate. Scenario analysis is commonly used to estimate changes to a portfolio's value in response to an unfavorable event and may be used to examine a theoretical worst-case scenario. Investopedia

Note: Administrators have the ability to grant access to the designated stakeholders of the voting process.

How can I learn more?

Learn more by visiting our website, inquiring via our instant messenger, scheduling a demo, or our contact form.

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We are always open to meeting great people. Visit our careers page to view our current job openings.

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Visit the contact us page for our contact information.

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