Chapter 9 Summary - Chapter 9 Summary Basic Business...

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Chapter 9 Summary Basic Business Finance 3/26/08 Chapter 9 Summary Legal Rights and Privileges of Common Stock Holders Control of the Firm A proxy is a document giving one person the authority to act for another, typically the power to vote shares of common stock. A proxy fight is an attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote their shares to replace the current management. A takeover is an action whereby a person or group succeeds in ousting a firm’s management and taking control of the company. The Preemptive Right Preemptive right a provision in the corporate charter or bylaws that gives common stockholders the right to purchase on a pro rata basis new issues of common stock (or convertible securities). Types of Common Stock Classified stock is common stock that is given a special designation, such as class A, class B, and so forth, to meet special needs of the company.
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Founder’s shares are stock owned by the firm’s founders that has sole voting rights but restricted dividends for a specific number of years.
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