South Dakota Designation of Rights, Privileges and Preferences of Preferred Stock

• Category: Corporations - Public - Anti-takeover
• State: Multi-State
• Control #: US-CC-13-278I
• Format: Word; Rich Text

Description

This is a multi-state form covering the subject matter of the title.

The South Dakota Designation of Rights, Privileges, and Preferences of Preferred Stock is a legal document that outlines the specific rights and privileges granted to holders of preferred stock in a South Dakota corporation. This designation is crucial as it establishes the unique features and benefits associated with owning preferred stock, which often differ from those of common stock. There are various types of South Dakota Designation of Rights, Privileges, and Preferences of Preferred Stock that a corporation can choose based on their specific needs and objectives. These types may include: 1. Cumulative Preferred Stock: This type entitles the shareholders to receive any unpaid dividends in subsequent periods if they are not declared or paid in a specific year. The accumulated dividends must be paid before any dividends are distributed to common shareholders. 2. Non-Cumulative Preferred Stock: Unlike cumulative preferred stock, this type does not accumulate any unpaid dividends. If dividends are not paid in a particular year, shareholders of non-cumulative preferred stock forfeit their rights to receive them. 3. Convertible Preferred Stock: This type grants shareholders the option to convert their preferred shares into a predetermined number of common shares. The conversion ratio is specified in the designation, enabling shareholders to participate in any potential appreciation of the company's common stock. 4. Participating Preferred Stock: This type entitles the preferred shareholders to receive additional dividends along with the regular preferred dividends. Once the preferred dividend is paid, these shareholders also receive a share in the remaining profits distributed to common shareholders. 5. Non-Participating Preferred Stock: In contrast to participating preferred stock, non-participating preferred shareholders receive only their fixed dividend and do not participate in any additional profits allocated to common shareholders. 6. Adjustable Rate Preferred Stock: This type allows for the adjustment of the dividend rate at specific intervals. The adjustment can be based on factors such as prevailing interest rates, company earnings, or any predetermined formula outlined in the designation. 7. Redeemable Preferred Stock: This type provides the corporation with the right to repurchase the preferred shares from shareholders at a predetermined price or at the company's discretion. This offers flexibility to the corporation while giving shareholders potential exit options. These types of South Dakota Designation of Rights, Privileges, and Preferences of Preferred Stock enable corporations to customize the features and benefits associated with their preferred shares. It is essential to draft this legal document accurately and comprehensively to ensure compliance with South Dakota laws and effectively communicate the shareholders' rights and expectations. Seeking guidance from experienced legal counsel is recommended to ensure the designation satisfies the specific needs and goals of the corporation and its shareholders.