When the articles provide a _____________, preferred stock has priority over common stock to the extent the articles state after a corporation is dissolved and when assets are distributed.

Question

Quizplus · Accepted Answer

The term "liquidation preference" refers to the amount that preferred stockholders receive before common stockholders in the event of liquidation or dissolution of the company. This preference is typically outlined in the company's articles of incorporation. Therefore, when the articles provide a liquidation preference, preferred stock has priority over common stock in the distribution of assets upon dissolution of the corporation.

When the Articles Provide a _____________, Preferred Stock Has Priority