SIE: Protective Provisions

Protective Provisions

Protective provisions are a relatively standard feature of preferred stocks and are often written into a company’s certificate of incorporation. Protective provisions permit preferred shareholders to veto certain actions by the company, such as the sale or merger of the company and the issuing of new shares. They are designed to protect the preferred stockholders, which are almost always the minority shareholders, from the dilution of their investment by the common shareholding majority. These veto rights extend to:

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