Rainbow Corporation has outstanding 1,000 shares of voting c…
Rainbow Corporation has outstanding 1,000 shares of voting common stock and 1,000 shares of nonvoting preferred. The preferred has a liquidation preference equal to its par value of $100 per share plus a 3 percent noncumulative dividend. Rainbow submits to its stockholders a proposal to authorize a new class of preferred stock with redemption rights that would come ahead of the old preferred stock. At a shareholder’s meeting, 700 common and 400 preferred vote in favor of the proposal. Which of the following statements is correct?
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