Benihana, the business behind the nation’s largest chain of Japanese restaurants, will soon hold a meeting with shareholders to discuss whether the company will follow through on a proposed merger. In effect, the merger will increase the authorized number of shares of the company’s stock, reports the Wall Street Journal’s Market Watch.
Many shareholders are concerned about this merger because they think it will dilute the stocks they own and reduce their power on the board. Still, a number of them think it would be unwise to prevent a merger that will give management flexibility in responding to the dynamic circumstances of the company, says the source.
The merger will likely go through regardless of the shareholders’ opinions because the company’s initial certificate of incorporation was written in a way that gives the business more control than them in such matters.
Benihana’s certificate of incorporation includes a section that outlines that the company can “opt out” of a shareholder vote to approve an increase in the authorized number of shares.
Entrepreneurs considering business formation might take this case as an example of the importance of a well-planned certificate of incorporation. To learn more about how to incorporate a business with good sense, future business owners can talk to professionals at an incorporation service.