Freeze and Finalization

Fairly Exact is a temporary operating method. Finalization begins when a documented trigger occurs, including a priced financing, acquisition, merger, dissolution, liquidity event, sustainable market compensation, a material capital or allocation change, a contemplated discretionary distribution, or a declaration that exceeds the configured approval threshold.

Funding and Advisor arrangements remain outside the member ledger. Their separate instruments may affect transaction planning, but they do not alter the member-ledger calculation.

Once finalization begins:

1. Stop opening and activating Contribution Blocks.
2. Resolve every pending, active, and disputed Contribution Block under the documented delivery and acceptance process.
3. Verify that every member-ledger unit traces to an accepted Contribution Block and allocation.
4. Include accepted units held by active and departed contributors in the final denominator.
5. Freeze the member ledger using the approval and documentation required by the governing documents.

Only the member ledger freezes. The block records remain an immutable history of their lifecycle and outcomes. The system must not produce a completed final allocation while a Contribution Block dispute remains unresolved.

First calculate each contributor’s frozen percentage:

accepted contributor units ÷ total accepted Contribution units

This calculation is the same for both paths. It excludes Funding Blocks, Advisor Blocks, reimbursements, negotiated target percentages, and separate-instrument amounts. Preserve the inputs, denominator, percentages, and rounding record as the final member-ledger certificate.

FIXED_LLC records the frozen percentages as the final allocation state for an LLC-based implementation. It requires no conversion share count or conversion filing reference. The governing documents, approvals, and procedures needed to give that state legal effect must be prepared or approved by qualified professionals.

CORPORATE_CONVERSION uses the same frozen percentages and then allocates a selected whole-share total by largest remainder. This path requires the conversion share total and applicable filing references in the framework record. Qualified professionals must determine the entity, documents, approvals, filings, interest treatment, tax treatment, and transaction steps.

Choose the calculation share total (default: 10,000,000) here, on the path that uses it, rather than at adoption. It is nothing but a modeling input — it does not issue shares, complete a conversion, or carry any meaning before this point, and the fixed-LLC path never needs it.

The software distinguishes the resulting states: fixed-LLC finalization is FINALIZED_LLC; completed corporate conversion is CONVERTED. Neither status asserts legal or tax compliance on its own.

Before marking finalization complete:

• record the selected path, trigger, frozen member-ledger total, percentages, approvals, and professional-review references;
• for CORPORATE_CONVERSION only, record the conversion share total, whole-share allocation, and required filing references;
• reconcile the cash ledger without adding cash to member-ledger units;
• identify Funding Block and Advisor Block instruments that require separate action;
• identify any distribution, allocation, financing, IP, employment, securities, filing, or compliance work for qualified professionals; and
• archive the final certificate and supporting evidence.

Fairly Exact supplies planning, calculation, and recordkeeping tools. It does not complete either finalization path.

The frozen member ledger becomes a historical record explaining how the allocation developed. It no longer changes after finalization.

The governing documents and professionally executed transactions determine ownership, voting, distributions, future issuances, and other legal or tax effects after that point.