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My potential venture capital investor wants a class vote on certain matters. What is a class vote?
A class vote is an opportunity for holders of a certain class of stock to vote separately to approve particular transactions. Venture capital investors often hold a different class of stock (such as preferred stock) than other stockholders; they frequently seek to require that the preferred holders, voting as a separate class, must approve fundamental transactions such as mergers, sales of assets and liquidation of the company. Class voting gives the holders of that class a veto power over these corporate developments.
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