Introduction
Share class conversion is the process of changing a stakeholder's shares from one share class to another. This typically happens when your company creates a new share class or when existing shares need to be reclassified according to specific terms or agreements.
This article explains how to record share class conversions in Ledgy for both individual stakeholders and multiple stakeholders at once.
Who can convert share classes: You need to be an account admin in Ledgy to create and record share class conversion transactions.
When to convert share classes
You may need to convert share classes in several situations:
A new share class has been created and existing shares need to be converted to the new class
Preferred shares are converting to common shares (often during an IPO or acquisition)
Common shares are being upgraded to preferred shares
Shares are being reclassified due to changes in rights or terms
Contractual conversion triggers have been met (such as time-based or performance-based conversions)
Before recording a conversion in Ledgy, ensure the new share class has already been created in your cap table. If you need to create a new share class first, you can do this in the Share Classes section of Ledgy.
How to convert a single stakeholder's share class
To convert the share class for one stakeholder, follow these steps:
Step 1: Navigate to the transaction page
From your Ledgy dashboard, go to Ownership > Transactions > Add Transaction.
Step 2: Select class conversion
In the transaction type menu, select Other transactions > Class conversion.
Step 3: Fill in the conversion details
In the modal window that appears, you need to define the following information:
Conversion date - When the conversion takes place
Stakeholder - Which stakeholder's shares you want to convert
Number of shares - How many shares to convert
From share class - The original share class of the shares
To share class - The new share class the shares are converting to
Step 4: Add optional information
You can optionally add the following to your conversion transaction:
Documents - Attach relevant legal documents, board resolutions, or conversion agreements
Internal note - Add notes about the reason for the conversion or any relevant context
Step 5: Save the transaction
Click the Save button to create the share class conversion transaction. The transaction will be recorded in your cap table and the stakeholder's share class will be updated accordingly.
How to convert share classes in bulk
If you need to convert share classes for multiple stakeholders at once, you can use Ledgy's bulk import feature. This is particularly useful when converting many stakeholders during events like recapitalizations or share class restructurings.
Step 1: Navigate to transactions
From your Ledgy dashboard, go to Ownership > Transactions.
Step 2: Access the import feature
At the top of the transactions page, click the Import button.
Step 3: Select the class conversion template
From the import options, select the "Class Conversion" template.
Step 4: Download the Excel template
Click Download template to get the Excel file. This template contains the correct column structure for bulk share class conversions.
Step 5: Populate the template
Open the downloaded Excel template and fill in the required information for each conversion:
Stakeholder name or identifier
Conversion date
Number of shares to convert
Original share class (from)
New share class (to)
Any additional required fields
Important tips for bulk imports:
Make sure all share classes already exist in Ledgy before importing
Use the exact share class names as they appear in your Ledgy account
Double-check stakeholder names match your existing records
Ensure all dates are in the correct format
Step 6: Upload the completed template
Save your completed Excel file, then drag and drop it into the data upload box in Ledgy.
Step 7: Start the import
Click the Import now button to process the bulk conversions. Ledgy will validate the data and create all the share class conversion transactions.
After the import completes, you can review the newly created transactions in your transaction history to confirm everything was processed correctly.
What happens after a share class conversion
Once you record a share class conversion transaction in Ledgy, several things happen automatically:
Your cap table is updated
The stakeholder's shares are moved from the original share class to the new share class. The total number of shares remains the same, but they are now classified under the new share class.
Ownership reports reflect the change
All ownership reports, cap table views, and stakeholder portfolios are automatically updated to show the new share class allocation.
Transaction history is recorded
The conversion transaction is added to your company's transaction history with all the details you provided, including dates, amounts, and any attached documents.
Stakeholder can view the change
If the stakeholder has access to their Ledgy portfolio, they will see their updated share class information reflecting the conversion.