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Why would any sane person buy shares with this power vested in the board "authorize our board of directors to issue, without further action by the stockholders
by walshemj 8y ago
Why would any sane person buy shares with this power vested in the board
"authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;"
- sporter 8y agoThis language describes "blank check" preferred stock -- which about 98% of IPO companies have in their governing docs. So, while you might not agree with the philosophy behind it, if it is a veto item on investing, you will have a pretty limited portfolio. See page 12 of this IPO study https://alerts.davispolk.com/10/3818/uploads/2018-non-controlled-ipo-survey.7.9.2018.pdf https://alerts.davispolk.com/10/3818/uploads/2018-non-contro...
- walshemj 8y agoId rather stick to shares where shareholders have to agree to disallowing pre-emption rights.
- miketery 8y agoI believe this is how it typically works. The board is hired by the shareholders to act in their interest. The board has a lot of powers. The shareholder if unhappy with the boards performance can fire the board.
- walshemj 8y agoDid you not read the bit without further reference to share holders - the board can issue new shares to dilute existing share holders.