Which of the following is the hard retraction requirement?
A) The preferred shares must be paid off with common shares or other preferred shares.
B) The preferred shares must be paid off with cash.
C) The preferred shares must be paid off within 30 days of retraction.
D) The preferred shares can only be retracted in cases of financial distress.

Question

Quizplus · Accepted Answer

The hard retraction requirement states that the preferred shares must be paid off with cash. This means that the company cannot use common shares or other preferred shares to pay off the retracted shares, and must instead provide cash payment to the investor. This requirement is typically included in preferred stock agreements to ensure that investors have a guaranteed exit strategy and can receive their investment back in a timely manner.

Which of the Following Is the Hard Retraction Requirement