Friday, November 11, 2011

Preferred Shares –Bargain for Rights

 Preferred Shares –Bargain for Rights

  • Have preference or priority in payment over common shares Terms are set out in articles or in separate document called “certificate of designations. 
  • They get dividends paid out first. The dividends could accumulate and then preferred shares must get paid out first before holders of other classes of stock outstanding.
  • Initially, they did not have voting rights
  • Liquidation Preference- Might get right to sell shares back to the company at a certain price 
  • Preemptive rights – a right to buy shares ahead of other shareholders from the corporation This is an Anti-Dilution Device and normally something that preferred shareholders pay for and bargain to receive.

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