DEFINITION of '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.

BREAKING DOWN 'Blank Check Preferred Stock'

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).

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