The Board Approves a Proposed Amendment to Deny Existing Preemptive

question 67

Multiple Choice

The board approves a proposed amendment to deny existing preemptive rights to Class A preferred, and to issue stock in a new Class D preferred that would be accorded liquidation preference after all other classes of preferred stock. Preferred Classes B and C would remain the same. Which of the following would be true?

• A) Only Class B and C shareholders vote.
• B) A majority of Class A, B, and C shareholders all together would be needed to pass the amendment.
• C) Class B and C shareholders would not be entitled to vote at all.
• D) Class A and C shareholders would vote together.

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Definitions:

Salvaged

Refers to assets that have been recovered, reused, or sold after being discarded or considered waste.

Tax Shield Approach

A financial strategy that utilizes deductible expenses, like interest, to reduce a company's taxable income, thereby lowering its tax liability.

Operating Cash Flow

The cash generated from a company's normal business operations, indicating its ability to generate positive cash flow.

CCA Class

A classification system used in Canadian tax law for capital cost allowance, determining the depreciation rate for tax purposes of tangible capital assets.