Square IPO Soars, But 'Ratchet' Provision Worries Some

Law360, New York (November 19, 2015, 9:24 PM EST) -- Square's shares soared 45 percent in debut trading on Thursday after its $243 million initial public offering priced below range, though a “ratchet” clause requiring the company to issue additional shares to offset the reduced price has some worried the tool unfairly favors more sophisticated investors.

San Francisco-based Square Inc., whose highly anticipated IPO priced at $9 per share, less than its forecasted range of $11 to $13, explained in its registration statement that certain late-stage investors who bought its Series E shares valued at $15.46 in private funding round in fall 2014 would be awarded additional stock if a public offering...

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