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In theory, the company has a legal fiduciary duty to act in the best interest of the shareholders. If they try to rob the shareholders by unreasonably diluting,
by gibybo 11y ago
In theory, the company has a legal fiduciary duty to act in the best interest of the shareholders. If they try to rob the shareholders by unreasonably diluting, you could sue for breach of that responsibility.
In practice, nothing really prevents it completely. However, the founders will generally be getting diluted the same amount as you so their interests are somewhat aligned with yours to negotiate a reasonable dilution amount. If they make some deal in which other shareholders get diluted much worse than themselves, it's often strong grounds for a legal suit.
- elmar 11y agoReal life extreme dilution example: How Mark Zuckerberg Booted His Co-Founder Out Of The Company http://www.businessinsider.com/how-mark-zuckerberg-booted-his-co-founder-out-of-the-company-2012-5 http://www.businessinsider.com/how-mark-zuckerberg-booted-hi... http://gawker.com/5643915/mark-zuckerberg-describes-the-dirty-tricks-that-led-to-the-facebook-movie http://gawker.com/5643915/mark-zuckerberg-describes-the-dirt...