Blank Check Preferred Stock

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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.

INVESTOPEDIA EXPLAINS '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).

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Articles Of Incorporation

    A set of documents filed with a government body to legally document ...
  3. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  4. Anti-Takeover Measure

    Measures taken on a continual or sporadic basis by a firm's management ...
  5. Hostile Takeover

    The acquisition of one company (called the target company) by ...
  6. Poison Pill

    A strategy used by corporations to discourage hostile takeovers. ...
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