The board approves a proposed amendment to deny existing preemptive rights to Class A preferred, and to issue stock in a new Class D preferred that would be accorded liquidation preference after all other classes of preferred stock. Preferred Classes B and C would remain the same. Which of the following would be true?

Question

Quizplus · Accepted Answer

Class A shareholders are directly affected by the amendment as it denies them existing rights, and Class B and C are indirectly affected since the introduction of Class D affects the overall preference structure. Therefore, a majority of all classes would typically need to agree for such a significant amendment to pass.

The Board Approves a Proposed Amendment to Deny Existing Preemptive