2.1.1 Equity Securities

Start with what a corporate charter does not say, because several of these questions turn on a silence. Cumulative voting exists only if the certificate of incorporation provides for it; Delaware's own section 214 says a certificate may provide for it, not that it must, so silence means one vote per share per seat. Pre-emptive rights are written as a denial: section 102 gives a stockholder no such right unless it is expressly granted in the certificate. Treasury shares, meaning shares the corporation has bought back and holds itself, neither vote nor count toward a quorum under section 160, and they still exist, which is why they can be reissued later. Authorised shares are a charter number too, so a board that wants more than the charter allows has to amend the certificate first, and that is a stockholder act, not a board one.

Rule 144 carries two numbers worth holding cold. The holding period before restricted stock may be resold is six months where the issuer files reports under the Exchange Act, and one year where it does not, so read the filing status in the stem before anything else. An affiliate's own resale volume is then capped at the greater of one percent of the class outstanding, or the average weekly reported trading volume over the preceding four weeks. Greater, not smaller.

Two labels get swapped constantly. Restricted describes how a share was acquired, in an unregistered sale. Control stock describes who is holding it, an affiliate, meaning a person who controls, is controlled by, or is under common control with the issuer. An officer who buys her own company's shares on the open market holds control stock; the shares themselves were registered when they were issued, so restricted is the wrong word for them.

The rest of the unit is vocabulary with sharp edges. A class of preferred stock can be created with full, limited or no voting powers, in section 151's own three words, so non-voting preferred is ordinary rather than an exception. Rights are struck below the market price and live for weeks; warrants are struck above it and live for years. And one American depositary receipt is not automatically one share: the SEC's investor bulletin on international investing says a receipt can represent one share, several, or a fraction, and that ratio is what drives its price.