Cohen paid $97m for something you can still get written into your own articles for the cost of a lawyer’s afternoon

Strip the zeros off and the GameStop sequence is simple: the company issued shares, the founder’s percentage fell by 0.94 points, and he spent $97m of after-tax money buying it back in the open market — and is still short. He had no contractual protection against dilution, so he had to repurchase his own position at a 32% markup to his own starting price.

A private Ontario corporation is where that protection is cheap. Pre-emptive rights — the right of first refusal on any new issuance, pro rata to your existing holding — are a clause in the articles or the unanimous shareholder agreement, not a $97m cheque. Anti-dilution and pre-emptive provisions are routine in Canadian shareholder agreements and are vastly easier to insert before an outside investor is at the table than after.

First step this week: pull your articles of incorporation and any shareholder agreement and look for two things — whether the directors can issue shares without offering them to existing holders first, and whether there is any pre-emptive right at all. If the answer is “yes they can” and “no there isn’t,” that is the gap Cohen is paying to close. It is a short conversation with a corporate lawyer and it is far cheaper now than at a financing.