Preferred shares are securities partially owned by a company that offers added value to the shareholder. This type of stock has some prerogatives over common stock, making it more attractive to some investors. Tilray Brands, a leading global cannabis consumer and lifestyle goods company, announced last week that it is undertaking the issuance of 120,000 shares of Series A preferred stock.
According to the announcement, the Series A preferred shares are entitled to 1,000 votes per share. However, they can only vote on Tilray’s pending proposal that the Class 1 common stock be eliminated. This is known as Proposal 3. If approved, the unissued Class 1 common stock would be eliminated after reclassification into shares of the firm’s authorized and unissued Class 2 common stock.
Instead of voting independently, the Series A preferred shares must vote in the same proportion (for or against) as all Class 2 common shares are voted. The Series A preferred stock would be converted into Class 2 common stock on a one-for-one basis at the close of the polls at the firm’s annual meeting of stockholders.
“We believe the issuance of the Series A Preferred Stock will help amplify and safeguard the rights of all stockholders through the approval of our proposed Charter Amendment. This would ultimately help execute our strategic plan by facilitating accretive acquisitions,” commented Irwin D. Simon, Tilray Brands’ chairman and chief executive officer. “An overwhelming majority of our stockholders that have voted at our annual meeting have voted in favor of the Charter Amendment (Proposal 3), but due to the nature of our stockholder base, the proposal to amend our Charter does not yet have enough votes to pass.”