Capital And Financial Structure

Par value arbitrary stated value may not be related

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Par Value - arbitrary stated value - may not be related to value, market price No Par – No arbitrary stated value Most modern statutes allow all shares to be no par (including the RMBCA) Classes of Shares – Common Generally have rights to: Vote Receive dividends Share in distribution on liquidation Classes of Shares – Preferred Have priority over common or other classes, as to dividends and/or distribution Dividends PREEMPTIVE RIGHTS RMBCA § 6.30 A preemptive right is the right to maintain one’s proportionate interest and control in the corporation i.e, proportionate amount of ownership and voting rights
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If shares have preemptive rights and corp. proposes to issue or option more shares, each existing shareholder has the right to purchase number of shares necessary to maintain her proportionate interest and control I.e., right of first refusal Which shares have preemptive rights (for a corporation that specifies shares have preemptive rights in its C/I)? Voting shares (i.e., that have right to vote for directors) Equity shares (i.e. unlimited dividend rights) Generally, common shares have one or both of these rights Generally, preferred shares do not have either right
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