Darkstone Code-Chapter 857 - 855: Merge with Me as One
After Lynch hung up the phone, it took Mr. Pato two or three minutes to return to the table and sit down.
He gave Lynch some time to think over and digest the information he got from the call. This is a matter of courtesy and manners.
Of course, one cannot use someone’s manners as a standard to cover all behavioral rules because everyone is in different social classes, and they approach the world and the world approaches them differently.
You can’t expect a worker to give you two or three minutes to process this information. They might not even avoid you before you connect the call and instead watch you with a open attitude.
As a result, when you look at them, they might inexplicably ask you, "Aren’t you going to answer the phone?"
Well-mannered people can make one feel like basking in the warm sunlight of early spring with a gentle breeze blowing, but those who lack manners aren’t necessarily a harsh winter.
Not necessarily!
"Mr. Wardrick’s call..." Lynch smiled and proactively started talking about the call, "Where were we before?"
Mr. Pato’s attention was clearly drawn by the title "Mr. Wardrick." It took him a few seconds to respond, "I don’t mind paying all in cash, of course, cross-shareholding is also possible."
"As long as I can complete the investment in this company, any method is open for discussion."
Originally, Mr. Pato planned to "purchase" Lynch Company’s shares with cash combined with equity, but now he’s offered to pay all in cash.
The method of trading shares for acquiring other company shares is quite common. It effectively converts company stock that doesn’t count as cash into usable wealth without causing a dump, saving capitalists a lot of time and costs.
However, this type of transaction itself has many restrictions, and it’s not necessarily suitable for every situation.
Especially when dealing with people like Mr. Pato and Mr. Wardrick, one needs to be more cautious.
Money doesn’t have many restrictions in use, but shares are different.
A million in cash can be used however one wants, whether it’s to help needy women until the last bill is spent, or for personal enjoyment. These choices are very free.
No one can refuse someone spending their own money on those needing help, they can only verbally criticize the person’s attitude towards life.
But shares are different. Big companies, especially public companies, can’t easily cash out the shares they hold. If the quantity is large, it must be reported to the exchange in advance.
Shareholders intending to cash out how many shares, or if the rights of shares are transferred, must be notified to the exchange at least one day in advance. Otherwise, related departments will investigate any unreported share changes.
This is to prevent various financial crimes, although sometimes real financial crimes find many ways to bypass this issue.
In addition, there’s another issue. Suppose Lynch agrees to Mr. Pato’s request and gets shares of Star Dream Butterfly Group.
However, no matter if he wants to cash out or transfer these shares, it must first be permitted by the board of directors of the group company. This is how big capitalists devour people.
Almost all consortiums and large group companies in the Federation have similar regulations to restrict board members. Once a shareholder’s shares exceed three percent, cashing out and transferring shares must be approved by the board.
It seems unbelievable, despite being a personal matter, the board has its own view.
Also, before acquiring these consortium shares, some things are stated in contracts.
This not only provides capitalists with effective self-protection but also gives them a way to "devour people" with their group company’s shares!
I use a million shares to exchange for all of your company’s shares, which only have a market value of fifty thousand. Seems like you made a profit?
Not only did assets increase from fifty thousand to a million, but you also indirectly enjoy a conceivable fraction of a thousandth or ten thousandth of the original company’s shares.
But in reality, that’s not the case. When the board refuses to let you cash out or transfer your shares, whether or not you go hungry entirely depends on whether the capitalist suddenly finds compassion.
In the Federation’s history, there have been quite a few such cases where a large company swallowed a small company through share exchange, and the founder of the small company declared personal bankruptcy before reaching the pinnacle of life.
Because the agreement they signed stipulated that cashing out or transferring shares within a certain period after the exchange would incur massive compensation.
After cornering these small merchants by other means, the company then bought back the shares from them at a very low price, according to the supplementary terms of the share transfer contract.
Some companies even specify a price for recycling these shares in the supplementary terms, almost undisguised in their greed.
Just like that, they plundered one small company after another for almost no cost.
Maybe some people might ask, why not just refuse them?
This question... sometimes isn’t easy. Firstly, many can’t resist the urge for overnight riches.
In the Federation, the only way to realize self-value and standard is to appear to have become a "successful person," which means being wealthy.
Secondly, business competition is far bloodier than imagined, not at all romantic, much less respectful towards enemies.
Each person who lost family and fortune in business warfare, eventually choosing to end their life by jumping off a building, proves this point.
Even if people know there are traps, sometimes they have to jump into them.
The cash after share exchange is another form of guarantee.
At this moment, after such brief thought, Mr. Pato offered to invest with the cash option. Although he called it cash, it’s not cash directly deposited in full, but in installments.
Lynch didn’t immediately agree, "Releasing too many shares will reduce my control over the company, but we both know I can’t refuse some investors. Among these shares I can release, who gets how much isn’t decided by either of us alone."
Mr. Pato nodded, "You mean you want to hold the key vote?"
Lynch nodded, did not deny it.
"But doing this will definitely cause some dissatisfaction. You can actually accomplish this in other ways, for instance, I will stand by your side."
Lynch couldn’t help but laugh hearing this, he asked, "Do you believe it yourself?"
"At least at this moment, I believe I can do this!"
Lynch shook his head; he said something as if he said nothing.
In Federation, founders being kicked out of decision-making layers or even the board by shareholders is quite common. No one guarantees their interests always align with the founder.
Rather than relying on others, it’s better to hold the key vote.
According to Federation’s legal rules, any major vote needs majority consent. So, what counts as a majority?
This is a complicated concept because the earliest person who established the concept of "majority" couldn’t determine what exactly counts as majority.
So they came up with a simple method: gathering some people and dividing them.
If there are only two people, neither can convince the other, hence there’s no majority.
When there are three people, if two stand together, that constitutes a majority.
In other words, a majority must exceed fifty percent but not too much.
Finally, with help from some mathematicians, it was determined that the concept of "majority" must, as a rule, exceed sixty-six percent.
In other words, Lynch must hold at least thirty-four point one percent of shares to hold the "key vote."
As long as he disagrees on something, the board cannot forcefully pass it.
He personally holds thirty-four point one percent of shares, leaving only sixty-five percent to be shared. Including inevitable future IPO plans, actually less than thirty percent can be divided among other people.
It’s too little; investors will definitely be dissatisfied.
Moreover, all investors dislike someone holding the key vote as it makes them feel their money was wasted with no way of meddling in the invested company.
This is precisely a very core issue; Lynch doesn’t want to lose his power because he can see through the fog and see the future, but others cannot.
In silence, Lynch seemed to have come up with a more suitable method.
"Mr. Pato, I have another proposal, maybe you’ll be interested."
Mr. Pato sat formally, whether he was a nobleman or not, he showed nobility in his demeanor, "Please speak, Mr. Lynch."
"Let’s split the rights to the shares, dividing them into ’power’ and ’profit.’ You can get the shares you want, but these shares have no voting power."
"In other words, you can attend board meetings but have no voting rights..."
Mr. Pato first shook his head, "That’s impossi..." but he didn’t continue, instead frowning deeply in thought.
He instinctively wanted to reject Lynch’s proposal but also felt... this way perhaps isn’t infeasible.
Anyway, he didn’t intend to express positions or make preferential votes in the board; the investment was purely for influence and future interests, and to enter the arms sales sector through Lynch’s influence.
So shares without voting rights seem palatable.
Because of Lynch’s idea, he extended it further, considering some internal issues of Star Dream Butterfly Group.
The room fell silent at that moment...
