New Mexico Proposed Amendment to Article 4 of Certificate of Incorporation: Authorizing Issuance of Preferred Stock Introduction: In New Mexico, proposed amendments to Article 4 of a corporation's certificate of incorporation seek to authorize the issuance of preferred stock. This amendment grants companies the flexibility to offer various classes and series of preferred stock, allowing for improved capital structuring and potential investment opportunities. Here, we delve into the details of this proposed amendment, its benefits, and the different types of preferred stock that can be created. Description of the Amendment: The New Mexico proposed amendment to Article 4 of the certificate of incorporation aims to enable corporations to issue preferred stock. This amendment empowers companies to designate and create multiple classes and series of preferred stock, which can possess unique rights, preferences, and restrictions. It serves as a significant step towards affording businesses greater financial flexibility and better aligning their capital structure with specific strategic goals. Importance and Benefits: 1. Enhanced Capital Structure: The proposed amendment provides an avenue for corporations to diversify their capital structure by introducing preferred stock, complementing their existing common stock. Preferred stock can offer unique features that appeal to different types of investors, allowing companies to optimize their financing choices. 2. Capital Raising Opportunities: By issuing preferred stock, businesses can tap into additional funding sources. Investors seeking fixed income-like instruments may find preferred stock appealing due to its potential for regular dividends. This expanded investor base can boost capital inflow and help finance growth initiatives, acquisitions, or research and development projects. 3. Risk Management: Preferred stock can be tailored to incorporate provisions that protect the company's interests, such as priority in dividend payments and liquidation preference. This flexibility allows corporations to mitigate risk and attract investors who prioritize stability and consistent returns. Different Types of Preferred Stock: 1. Cumulative Preferred Stock: This type of preferred stock guarantees that if dividends are not paid in a particular year, they will accumulate and must be paid before any common stock dividends are distributed. Accrued, unpaid dividends must be settled before any dividends can be paid to common stockholders. 2. Convertible Preferred Stock: Convertible preferred stock presents an opportunity for investors to convert their holdings into common stock, based on predetermined conversion ratios and at specified times. This feature allows investors to benefit from potential growth in the company's valuation and participate in future gains. 3. Participating Preferred Stock: Holders of participating preferred stock receive their predetermined dividends. Additionally, in the event of liquidation, they are entitled to receive additional payments, commonly calculated as a share of the remaining assets, alongside common stockholders. This provides increased potential returns to preferred stockholders, thereby attracting investors seeking greater upside potential. 4. Adjustable-Rate Preferred Stock: Adjustable-rate preferred stock can have variable dividend rates based on prevailing market conditions. These rates may be tied to benchmark interest rates or other indices, making them attractive to investors seeking potential returns in line with the current market. Conclusion: The proposed amendment to Article 4 of the certificate of incorporation in New Mexico offers companies the opportunity to issue preferred stock, unlocking various classes and series that cater to different investor preferences. This amendment’s benefits include improved capital structure, increased capital raising capabilities, and enhanced risk management. By introducing preferred stock, corporations open doors to a wider range of financing options and potential investors, promoting growth and stability.
New Mexico Proposed amendment to Article 4 of certificate of incorporation to authorize issuance of preferred stock with copy of amendment
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It is called a legal person because it can enter into a contract, own property in its own name, sue and be sued by others, etc. In essence, it is not human, but it acts through human beings. It is called an artificial person because it is invisible, intangible, and exists only in the vision of the law.
Definition of Corporation It is an artificial being, created operation of law, having the right of succession and the powers, attributes, and properties expressly authorized by law or incident to its existence.
N. an organization formed with state governmental approval to act as an artificial person to carry on business (or other activities), which can sue or be sued, and (unless it is non-profit) can issue shares of stock to raise funds with which to start a business or increase its capital.
In other words, the theory posits that it is an act of the state, i.e. the issuance of the charter, that creates a corporation as a legal fiction. ingly, ?a corporation is an artificial being, invisible, intangible, and existing only in contemplation of law?.
Articles of Incorporation refers to the highest governing document in a corporation. It is also known known as the corporate charter. The Articles of Incorporation generally include the purpose of the corporation, the type and number of shares, and the process of electing a board of directors.
DEFINITION: A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.