The charter documents of a corporation proposing to issue preferred shares (which are not participating and not convertible on a fair and equitable basis) without full voting rights shall provide that the holders of such preferred shares shall have the right to reasonable representation on the board of directors upon a cumulative default, whether consecutive or not, of eight quarterly dividends and that such right shall continue until the full payment of all arrears in dividends on such preferred shares. The right to elect a majority of the board is presumptively reasonable.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Amendment filed 5-3-83; effective thirtieth day thereafter (Register 83, No. 19).