Colorado Springs Startup Attorneys & Lawyers

What Are Cumulative Dividends?

If a dividend is sharing company profits to shareholders, then a cumulative dividend is a distribution made to the holders of special "preferred" shares regularly. It is unrelated to company profits.

Regular or "noncumulative" dividends are voluntary. This means the Board of Directors has the option of awarding them. This usually depends on how the company has performed each year.

However, paying cumulative dividends is mandatory. If the company can't pay out a cumulative dividend in any given fiscal year, the amount for that year is carried forward. It must always be paid out before any payments to common shareholders.

Not all "preferred shares" have the right to receive cumulative dividends. Some cumulative preferred shares carry limitations. For example, the company may only have to pay cumulative

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Starting an Arizona business usually starts with your type of incorporation. Limited Liability Corporations (LLCs) offer a lot of the benefits of C Corp without the requirement to file a separate tax return for the business.

What Is an LLC?

An LLC is a combination between a sole proprietorship and a separate business incorporation. You get the tax pass through benefits and the protection of your

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Updated August 21, 2020: 

What Is a Hold Harmless Clause?

A hold harmless clause is a clear legal statement indicating that an individual or enterprise will not be held liable in any way for the risk, danger, injury, or damages caused to the other party. Often, such a clause is signed when an individual embarks on an activity or purchase that involves some degree of unavoidable risk. 

This is a decision between two people or groups. It can protect either one party or both. Whoever is protected by the clause cannot be sued for whatever problem may arise.

A hold harmless clause is also called a hold harmless letter or release, a save harmless clause, a waiver of liability, or a release of liability. These agreements are usually seen in leases, contracts, and easements.

When Is a Hold Harmless Clause Used?

A hold harmless clause c

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Updated October 1, 2020: 

What is Convertible Preferred Stock?

Convertible preferred stock is a type of preferred stock that gives holders the option to convert their preferred shares into a fixed number of common shares after a specified date. It is a hybrid type of security that has features of both debt (from its fixed guaranteed dividend payment) and equity (from its ability to convert into common stock).

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Updated November 10, 2020:

What are Authorized Shares?

Authorized shares are the number of stock shares a company may issue to investors or employees at the time they incorporate and stock shares that the company board of directors may issue later as specified in the Articles of Incorporation.

Why Is Getting the Number of Authorized Shares Right Important?

Authorized shares can be issued when a company asks for financing. They may also be issued as a benefit for key employees. Usually, the number of shares that are authorized is much more than what is actually needed. This is to allow the company to issue stocks in the future when needed (as employee perks or perhaps as a secondary offering to raise more money). A company may refrain from issuing all of its authorized shares

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