EcoloCap Solutions Inc. (fka ECOS)

[MoneyJames]

From the June 5th article (postponing the shareholders meeting):

"The meeting will also consider an amendment to Articles of Incorporation to create a class of Preferred Stock, consisting of 100,000,000 shares, par value $0.00001 per share, the rights, privileges, and preferences of which to be set by Board of Directors without further shareholder approval."





Though it seems negative, this is actually a positive long-term. Here is some knowledge for y'all:

Source: http://www.investopedia.com/ask/answers/06/preferredsharestaxbenefit.asp

Does issuing preferred shares offer a tax advantage for corporations?


There is no direct tax advantage to the issuing of preferred shares when compared to other forms of financing such as common shares or debt. The reason for this is that preferred shares, which are a form of equity, are paid fixed dividends with after-tax dollars. This is the same case for common shares. If dividends are paid out, it is in after-tax dollars.

Preferred shares are considered to be like debt in that they pay a fixed rate like a bond (a debt investment). It is because interest expenses on bonds are tax deductible, while preferred shares pay with after-tax dollars, that preferred shares are considered a more expensive means of financing. Issuing preferred shares does have its benefits over bonds in that a company can stop making payments on preferred shares where they are unable to stop making payments on bonds without going into default.

There are a few reasons why issuing preferred shares are a benefit for companies. One benefit of issuing preferred shares, is that for financing purposes they do not reflect added debt on the company's financial books. This actually can save money for the company in the long run. When the company looks for debt financing in the future, it will receive a lower rate since it will appear the company's debt load is lower - causing the company to in turn pay less on future debt. Preferred shares also tend to not have voting rights, so another benefit becomes that issuing preferred shares does not dilute the voting rights of the company's common shares.