Last week we sent you a required legal notice regarding the reclassification of Class M Common Stock into Class B Common Stock for Rise Companies. We wanted to follow up with some additional information regarding this action and what it means for your iPO investment. It was an oversight on our part not to include a more complete explanation with the original notice.
In summary, the change has no current practical effect on shareholders. This change only authorizes the potential issuance of more Class B shares. However, until the company issues and sells those shares, if ever, they have no dilutive effect on your position or that of any existing shareholder.
Additionally, there has been no change in the corporate governance structure for the company’s issued and outstanding shares, and all existing shareholders still own the same shares, in the same amount, with the same rights.
To provide further detail around our rationale for the change, it was an administrative change to enable the company to continue to raise money in the future. The Class M shares were a leftover from an earlier form of corporate governance over six years ago that was no longer operative. We determined it was best to eliminate the Class M shares to bring our capital structure in line with what institutional markets would expect from us in the future.
We converted the Class M into Class B shares, which reclassifies existing shares in a way that they are now available to the company for potential future issuance as part of our ongoing efforts to create broad-based ownership of the company through our unique iPO fundraising model.
As always, thank you for your continued support of Fundrise.
The Fundrise Team