Investment firm Popular recently announced that shareholders approved a proposal to amend its Restated Articles of Incorporation. The amendment will enable the company to increase the shares of common stock, which will slightly reduce the value of each shareholder’s ownership of the company.
The shareholders generously voted to allow the company to increase the number of shares from 700 million to 1.7 billion. They also voted to allow the company’s board of directors to approve an executive compensation program.
While the voters were generous on these measures, they also demanded that their votes continue to shape the company. They voted against an amendment to the corporation’s restated articles that would eliminate the provision that requires shareholders’ votes to change capital stock assets.
Increasing the number of shares of common stock seems to be a trend, however not all companies are required to let shareholders vote on the matter because of specific provisions in their certificates of incorporation. For instance, Benhihana was able to increase common stock without asking shareholders’ permission.
For those considering business formation, it could be wise to file certificates of incorporation that limit the powers of shareholders. To learn more about how to incorporate a business, entrepreneurs can ask professionals at an incorporation service.