I 've often seen company diluted common shares. Can they dilute the preffered shares as well? Is this legal once the company has already IPO ?
2007-02-05 11:00:42 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
Yes, they can issue an unlimited amount of debt, and prefered stock is usually considered debt at most companies. Capital structure is under the complete control of managers.
2007-02-05 11:07:35 · answer #1 · answered by Dr. Daniel 2 · 1⤊ 0⤋
When you here the term "Fully Diluted shares", which is a higher amount of shares than the "Issued Shares"
The extra amount of shares are stock options of directors, But not issued yet, and maybe outstandinding warrants and rights given out at share issue time.
I don't think Perferred stock is optionable to insiders, but new prefferred stock can be sold at the discretion of the board of directors,
at any time a company can sell into the market, new issues of either common shares or preferred shares, or even Bonds to raise money for company use.
2007-02-05 22:31:03 · answer #2 · answered by bob shark 7 · 0⤊ 0⤋
Check out the prospectus. It should tell you how many shares of preferred are authorized. They might have been holding many of them as Treasury Stock, and it is legal to issue them.
If they are not authorized, I don't think they can issue new shares without stockholders voting on it.
Contact the SEC and ask them to look into it.
2007-02-05 19:05:48 · answer #3 · answered by The Cythian 3 · 0⤊ 0⤋