Amendment to Articles of Incorporation to change the terms of the authorized preferred stock
Definition and meaning
The Amendment to Articles of Incorporation to change the terms of the authorized preferred stock is a formal document that alters specific provisions outlined in the original Articles of Incorporation of a corporation. This amendment typically addresses aspects related to the characteristics, rights, and preferences of preferred stock within the company structure.
Legal use and context
This form is used by corporations when there is a need to update or modify the terms related to preferred stock. Such changes may include adjustments to dividend rights, redemption options, or voting rights that enhance flexibility in corporate governance and finance. It is essential for maintaining compliance with corporate laws and regulations and serves as a documentation tool for corporate record-keeping.
Who should use this form
This form is suitable for corporate boards of directors and corporate secretaries who need to amend their company's original Articles of Incorporation. It is particularly relevant for companies looking to attract investment or manage their capital structure efficiently.
Key components of the form
The key components of the Amendment to Articles of Incorporation include the following elements:
- The specific amendments being made to the language regarding the preferred stock.
- The terms associated with dividends, voting rights, and liquidation preferences of preferred stockholders.
- The approval process required for the amendment, usually necessitating a majority vote from shareholders.
Common mistakes to avoid when using this form
When completing the Amendment to Articles of Incorporation, it is important to avoid common pitfalls such as:
- Failing to obtain proper shareholder approval during the amendment process.
- Not clearly outlining the changes being proposed to the preferred stock terms.
- Neglecting to file the amendment with the appropriate state authority, which can render the amendment ineffective.
What to expect during notarization or witnessing
When preparing the Amendment to Articles of Incorporation, the document may need to be notarized or witnessed, depending on state requirements. During this process:
- A notary public will verify the identity of the signatories and witness their signatures.
- The document may be stamped with a notary seal to validate its authenticity.
- Ensure that any required witnesses are present and can attest to the signing of the document.
Benefits of using this form online
Utilizing an online platform to complete the Amendment to Articles of Incorporation can offer several advantages:
- Ease of access and convenience, allowing users to fill out forms anytime and anywhere.
- Reduction of potential errors through guided prompts and auto-fill features.
- Faster processing times with the option to download, print, and directly file documents as needed.
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FAQ
Preferred Share Basics As with any produced good or service, corporations issue preferred shares because consumersinvestors, in this casewant them. Investors value preference shares for their relative stability and preferred status over common shares for dividends and bankruptcy liquidation.
The easiest way to amend the Articles is to draft, adopt, and file a Certificate of Amendment of Articles of Incorporation. For a name change only, the Secretary of State offers a simple form that can be used. A Certificate of Amendment may be appropriate for minor other changes.
That the articles of incorporation or any amendment thereto is not substantially in accordance with the form prescribed herein; 2. That the purpose or purposes of the corporation are patently unconstitutional, illegal, immoral, or contrary to government rules and regulations; 3.
Every corporation must have at least one type of stock. This rule even applies to S corporations, but they are limited to 100 total shares and only one type of stock. The term stock is often used interchangeably with shares or equity. Those who own stock are called shareholders or stockholders.
Unless otherwise prescribed by this Code or by special law, and for legitimate purposes, any provision or matter stated in the articles of incorporation may be amended by a majority vote of the board of directors or trustees and the vote or written assent of the stockholders representing at least two-thirds (2/3) of
Authorized stock refers to the maximum number of shares a publicly-traded company can issue, as specified in its articles of incorporation or charter. Those shares which have already been issued to the public, known as outstanding shares, make up some portion of a company's authorized stock.
Some corporations issue both common stock and preferred stock. However, most corporations issue only common stock. In other words, it is necessary that a business corporation issue common stock, but it is optional whether the corporation will decide to also issue preferred stock.
Obtain articles of amendment of the articles of incorporation (sometimes called the certificate of amendment of articles of incorporation) from your state's Secretary of State. Obtain a copy of the original articles of incorporation. Propose the change in the articles of incorporation to the Board of Directors.
Preferred stock is authorized when a corporation files the corporation.For example, a corporation may authorize 100,000,000 shares of common stock and 10,000,000 shares of preferred stock. Preferred Stock is usually issued for special situations, for example to certain investors.