Mainstreet Bancshares, Inc.
SEC Document
SEC Filing
The Restated Articles of Incorporation currently authorize the issuance of up to 10,000,000 shares of common stock. As of March 28, 2024, approximately 2,385,910 shares of common stock were available for future issuance. 
The Company currently has no understandings, agreements or commitments to issue common stock or to reserve additional common shares for issuance under equity incentive plans.
On February 21, 2024, the Board of Directors considered the limited number of available common shares and unanimously voted to adopt and recommend for shareholder approval an amendment to the Restated Articles of Incorporation increasing the authorized shares of common stock from 10,000,000 shares to 15,000,000 shares. The adoption of this amendment to the Restated Articles of Incorporation was subject to the approval by the Company's common shareholders by the vote of a majority of the votes entitled to be cast by such shareholders. At the Annual Meeting, the common stockholders approved the proposed amendment. See Item 5.07 of this Current Report on Form 8-K. 
The Board of Directors believes that it is advisable to have a greater number of authorized shares of common stock available for issuance in connection with acquisitions and mergers, public or private financings, and various general corporate programs and purposes. 
The Company may from time to time consider acquisitions and mergers as opportunities arise, stock splits and public or private financings to provide us with capital, any or all of which may involve the issuance of additional shares of common stock or securities convertible into shares of common stock. It is widely expected that consolidation of the financial institution industry will continue and may accelerate, particularly as the economy improves. Also, additional shares of common stock may be necessary to meet anticipated future obligations of our stock-based compensation and employee benefit plans, under which we may grant future equity awards to our officers, other employees and directors. The Board of Directors believes that these benefit plans are critical to retaining our current management team and attracting additional management talent. 
The Board of Directors believes that having the authority to issue additional shares of common stock will avoid the possible delays and significant expense of calling and holding an additional special meeting of shareholders to increase the authorized common shares at a later date and will enhance its ability to respond promptly to opportunities for acquisitions, mergers, stock splits and additional financings. Such a delay may result in our inability to consummate a desired transaction under a required deadline. By having additional common shares authorized, we can be prepared to act quickly as opportunities arise. 
The additional authorized shares of common stock may be issued for such consideration, cash or otherwise, at such times and in such amounts as the Board of Directors may determine without further shareholder approval, except to the extent that shareholder approval is required by applicable laws, rules or regulations. Under the Virginia Stock Corporation Act, the Company's shareholders must approve a share issuance in connection with an individual merger or combination that is greater than 20% of the total number of shares of the Company on a pre-transaction basis. 
The authorization of additional shares of common stock will not, by itself, have any effect on the rights of present shareholders. The additional 5,000,000 shares to be authorized will be a part of the existing class of common stock and, if and when issued, would have the same rights and privileges as the shares of common stock presently authorized, issued and outstanding. Shareholders do not have preemptive rights to subscribe for or purchase additional shares of common stock. Accordingly, the issuance of additional shares of common stock for corporate purposes other than a stock split or stock dividend could have a dilutive effect on the ownership and voting rights of shareholders at the time of issuance. 
The full text of the amendment to our Restated Articles of Incorporation is filed as Exhibit 3.1 to this Current Report on Form 8-K. 
The amendment will be effective upon the filing of articles of amendment with the State Corporation Commission of the Commonwealth of Virginia.