Blank Check Preferred Stock
A method companies use to simplify the process of creating new classes of preferred stock to raise additional funds from sophisticated investors without obtaining separate shareholder approval. Investopedia Says:
To do this a company must amend its articles of incorporation to create a class of un-issued shares of preferred stock whose terms and conditions may be expressly determined by the company's board of directors.
This kind of stock can also be created by a public company as a takeover defense in the event of a hostile bid for the company (poison pill). Related Terms:
Anti-Takeover Measure
Articles of Incorporation
Hostile Takeover
Poison Pill
Preferred Stock
Takeover |