The charter documents of a corporation proposing to issue preferred shares which are not participating and are not convertible on a fair and equitable basis shall provide reasonable protective provisions for the preferred shareholders, including where appropriate (a) a provision that the dividends on such shares shall be cumulative, (b) a provision prohibiting any dividends on common stock during the existence of any arrears on the preferred shares, (c) a requirement for the approval by the vote or written consent of a specified percentage of the preferred shares of any adverse change in the rights of such shares and of the issuance of any shares having priority over such preferred shares, and (d) dividend restrictions on the common stock.

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).