Series 65: 2.3.6 Protective Provisions

2.3.6  Protective Provisions

Protective provisions are a relatively standard feature of preferred stocks, often written into a company’s certificate of incorporation. Protective provisions permit preferred shareholders to veto certain actions by the company, such as the sale or merger of the company and the raising of capital. They are designed to protect the preferred stockholders, which are almost always the minority shareholders, from the dilution of their investment by the common sharehold