Understanding Preferred Stock Holders and Their Rights

Preferred stock holders have a unique set of rights and privileges that differentiate them from common stock holders.

Preferred stock holders are typically given a higher claim on assets and dividends than common stock holders.

One of the key rights of preferred stock holders is the right to receive dividends before common stock holders.

In the event of a company's liquidation, preferred stock holders are paid out before common stock holders.

Preferred stock is a flexible type of security, which is why it's often used in venture-backed companies. In the US, venture capital investors typically favor preferred stock for their investments.

There are several types of preferred stock, each with its own unique characteristics. Convertible preferred stock, for example, can be converted to a predetermined number of common shares. This can be beneficial for investors who want to eventually own common stock.

Cumulative preferred stock is another type, which means that if an issuer of shares misses a dividend payment, the payment will be added to the next dividend payment. This ensures that investors receive their due payments.

Preferred stock can also be exchangeable, meaning that the shares can be exchanged for some other type of security. This can provide investors with more flexibility and options.

Lastly, perpetual preferred stock has no fixed date on which the shareholders will receive back the invested capital. This type of stock is often used in venture-backed companies, where the focus is on growth and return on investment rather than a specific timeline.

Here are the different types of preferred stock in a quick reference list:

As a preferred stock holder, you're likely looking for the advantages of owning these shares. One key benefit is that you have a secured position in case of the company's liquidation, with a priority in claiming the company's assets.

Preferred shares also provide a fixed income in the form of dividend payments. This can be a great way to earn a regular return on your investment, without having to worry about the company's financial performance.

The company's management enjoys the flexibility to set up almost any terms for the shares, giving them more control over the financing process. This can be beneficial for the company, but it's also worth considering how it might impact your investment.

Investors with preferred stock are in a more secure position relative to common shareholders in the event of liquidation. This is because they have a priority in claiming the company's assets, which can provide peace of mind.

Here are some key benefits of owning preferred shares:

LifeMD, Inc. has announced a cash dividend for holders of its 8.875% Series A Cumulative Perpetual Preferred Stock.

The dividend amount is $0.5546875 per share, which will be paid on January 15, 2025.

To be eligible for the dividend, you must be a holder of record at the close of business on January 3, 2025.

Preferred stock is a security that represents ownership in a corporation, like common stock. But it has rights that common stock doesn't, such as getting paid ahead of common stock in a liquidation or sale of the company.

In US venture-backed companies, preferred stock typically carries a liquidation preference, allowing it to get paid ahead of common stock, but after debt. This is a key advantage for investors.

Preferred stock may also have other economic rights, such as the right to receive dividends before the common stock. This means that preferred stock holders get paid first when it comes to dividends.

US venture capital investors generally favor preferred stock as the instrument for their investments. This is because it gives them a higher claim on assets in case the company goes bankrupt.

Preferred stock is often described as either “non-participating” or “participating” preferred stock. This distinction refers to what the holders of the preferred stock would receive in a liquidation or sale of the company.

In a liquidation or sale, holders of “non-participating” preferred stock have to choose between receiving their liquidation preference or getting paid alongside the common stock based on their ownership percentage, but do not receive both.

LifeMD, Inc. recently declared a quarterly dividend for holders of its 8.875% Series A Cumulative Perpetual Preferred Stock.

The dividend amount is $0.5546875 per share, which will be paid on January 15, 2025.

To receive this dividend, you must be a holder of record at the close of business on January 3, 2025.

Investors can contact Marc Benathen, Chief Financial Officer, at [email protected] for more information.