Quote from: blackreplica on July 25, 2013, 06:11:14 AM

Quote from: aiwill on July 25, 2013, 05:59:42 AM

Thanks for all suggestions. It s still a draft that has been being changed. I v already updated a lot .

Aiwill, ive had a look at your amendment

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"The other 7,600,000 shares are held by investors of BTCSEA CO.,Ltd ,which is not available and limited to open currently. However,these investors might also sell their shares by their own later on.

Each share has the same dividends and there will be no more additional shares to be brought in unless a proclamation in advance, which, mostly likely,caused by a big movement/progress/project(examples:new generation of 40nm chips / full custom design systems / new large-scale hashrate deployment ). To protect the interests of shareholders,BTCGARDEN will never add more than 1,000,000 shares per half year."

Regarding this:

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"3. The power to make the desicion on issue date& quantity & value of addtional shares (up to 1,000,000shares per half year as maximum/limitation) I.e. the power of share dilution."

Combined with

"Each share in public has no voting rights"

I am deeply suspicious. Anyway, continuing,

"

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share dilution:

"The rights of all original issue shares and potential additional shares are virtually indentical.For example,if we add 1,000,000 more shares in 2014,each BTCGARDEN will then represent to 1/11,000,000th of the dividends of the whole 11,000,000 shares"

1,000,000 shares per half year is infinite dilution on an infinite time frame. This is not acceptable.

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"The size of it will never exceed 1,000,000 shares per half year, which equal to 1/10 of the total original shares."

1/10 every six months is 10/10 in 5 years.

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Dilution like this may also lead to a result that the percentage of shares in public will increase."

This is the classic definition on unwanted share dilution, and why people don't like it

Tl;dr

Issuable share capital needs to be limited and controllable by existing shareholders. In my opinion, allowing infinite share dilution by proclamation is totally unacceptable.

If you need funds for future development, then take a fixed percentage of profits, say 10%, for that and issue the remaining profits out as dividends and set a permanent fixed limit on the total number of shares. You don't generate funding by wantonly diluting existing share holder capital.

Thanks for your advise.

Dilution will be kept in our IPO because it can somehow help involving more people in our business without buying those very-over-valued shares from speculators. Also, since our business model is self-grown , dilution is somehow more reasonable than classic ones. The advantages for existing shareholders can be both lower share price & earlier dividends. Furthermore ,all reinvestments are supposed to a higher ROR which is good to everyone involved in.

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You don't generate funding by wantonly diluting existing share holder capital.

We will not , those small reinvestments like new-self-mining rooms creation will be taken from profit for sure, but larger ones will be absorbed from both dilution & earning.

We might modify the limitation of dilution to a lower percentage although it will be kept . please wait for the finial deal.