APPENDIX 5
SOME RIGHTS OF SHAREHOLDERS UNDER STATE CORPORATION LAWS
1. Issuance of Shares
The following rules prevail in most states.
A corporation’s Certificate of Incorporation must prescribe the classes of shares and the number of shares of each class that the corporation is authorized to issue. If more than one class of shares is authorized, the Certificate of Incorporation must prescribe a distinguishing designation for each class, and prior to the issuance of shares of a class the preferences, limitations, and relative rights of that class must be described in the Certificate of Incorporation. All shares of a class must have preferences, limitations, and relative rights identical with those of other shares of the same class.
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