Pay to Play

Pay to Play - Pay to Play is a provision in a company or the corporation's charter documents, inserted as part of a preferred stock financing ability that requires shareholders to actively participate in the stock certificate offerings in order to benefit from certain protections. If the shareholder does not purchase a pro rata share in any offering, the said stockholder loses the benefits of anti-dilution requirements. In a few accounts, the shareholder who did not participate actively has the stocks converted to common share stocks, losing all rights and provisions. The fears of shareholders will benefit by having other shareholders provide equity needed.