Preferred Stock: Glossary Definition
Definition of Preferred Stock:
Preferred stock is a type of capital stock that provides additional rights and privileges over common stock. These rights may include senior liquidation preferences, accruing dividends, voting rights, affirmative and negative covenants and redemption rights. Not all corporations are authorized to issue preferred stock. A corporation may not issue preferred stock if the articles of incorporation do not authorize the corporation to do so.
Preferred stock is the form of equity that is typically issued in a venture capital financing. S-corporations may only have one class of stock, so preferred stock is not used with S-corporations.
