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Do you know if there is any trend towards Delaware-incorporated startups including the "blank check preferred" provisions in their charter (DGCL Section 151). T
by hkhanna 11y ago
Do you know if there is any trend towards Delaware-incorporated startups including the "blank check preferred" provisions in their charter (DGCL Section 151). This would allow the Board to create new preferred shares by resolution, as opposed to placing the terms directly in the publicly-filed charter.
I am not too familiar with the industry, but if the trend is indeed to include such blank check preferred provisions, access to these terms would not be publicly available, and Fenwick may simply be drawing on its first-hand experience.
- hobbyjogger 11y agoIt's relatively rare, but even so the board has to file a Certificate of Designation to use it, which would be publicly available to the exact same degree as a Certificate of Incorporation.
- jalonso510 11y agoIt's really uncommon to authorize blank check preferred. That's an interesting idea to keep things confidential, but the major stockholders will care more about maintaining the power over the authorization of new shares. Blank check preferred is only really used, as far as I have heard, as a takeover defense for public companies worried about hostile takeovers, and even there I don't think it's that common anymore.
- matthewmcg 11y agoRight, that's been my experience as well (seeing mostly financings of companies in the southeast US).