What is Blank Check Preferred Stock?
Blank check preferred stock is a term used to describe a provision of a company’s charter that permits the board of directors to issue preferred stock with rights and preferences as determined by the board without a shareholder vote. These provisions were established to streamline the offering process, and they are very often part of the charter provisions public companies. However, these provisions also give the board a tremendous amount of discretion. For this reason, they are not normally part of a venture financed company’s charter. Sometimes blank check powers are included in the charter for a start up company. In this case, the power can be used in connection with the issuance of preferred stock to venture investors.
