What is the recommendation on allowable classes of stock within a ROBS funded startup? Would you be able to have convertible notes, warrants, or ‘preferred’ shareholders?
Happy to help! The investment types allowed for a ROBS will be dictated by what is allowed in the underlying qualified retirement account. The Internal Revenue Code (IRC) does not specify which types of investments a retirement account can invest in, only what it cannot invest in. IRC Sections 408 & 4975 prohibits Disqualified Persons from engaging in certain type of transactions (i.e. self dealing). Take a look a those IRC Sections for more clarifications.
I hope that helps!
You must be logged in to reply to this topic.
315 Madison Avenue, 24th Floor
New York, NY 10017
Disclaimer: We spend hours researching and writing our articles and strive to provide accurate, up-to-date content. However, our research is meant to aid your own, and we are not acting as licensed professionals. We recommend that you consult with your own lawyer, accountant, or other licensed professional for relevant business decisions. Click here to see our full disclaimer.
Product or company names, logos, and trademarks referred to on this site belong to their respective owners.