Exhibit
4.2


 


DESCRIPTION
OF SECURITIES


As
of December 31, 2019, the common stock, par value $2.00 per share, was the only class of securities of New Peoples Bankshares,
Inc. (the “Company”) registered under Section 12 of the Securities Exchange Act of 1934, as amended.


The
following section describes the general terms and provisions of the shares of the Company’s common stock. You should read
the Company’s articles of incorporation, as amended, and bylaws, as amended, for additional information about the common
stock. The articles of incorporation and bylaws are included as exhibits to the Company’s Annual Report on Form 10-K, to
which this exhibit also is attached.


General


 


As
of December 31, 2019, the Company’s authorized capital stock consisted of 50,000,000 shares of common stock, par value $2.00
per share, 23,922,086 of which were outstanding.


 


Voting
Rights


 


Each
holder of common shares is entitled to one vote per share held on any matter submitted to a vote of shareholders. There are no
cumulative voting rights in the election of directors.


 


Dividends


 


Holders
of common shares are entitled to receive dividends when and as declared by the board of directors out of funds legally available,
subject to certain restrictions imposed by state and federal laws. The Company is a corporation separate and distinct from New
Peoples Bank, Inc. (the “Bank”). Since most of the Company’s revenues will be received by it in the form of
dividends or interest paid by the Bank, the Company’s ability to pay dividends will be subject to certain regulatory restrictions.


 


No
Preemptive or Conversion Rights


 


Holders
of the Company’s common shares do not have preemptive rights to purchase additional shares of any class of the Company’s
stock, and have no conversion or redemption rights.


 


Calls
and Assessments


 


All
of the issued and outstanding common shares are fully paid and non-assessable.


 





Liquidation
Rights


 


In
the event of the Company’s liquidation, dissolution or winding up, the holders of common shares (and the holders of any
class or series of stock entitled to participate with the common shares in the distribution of assets) shall be entitled to receive,
in cash or in kind, the Company’s assets available for distribution remaining after payment or provision for payment of
the Company’s debts and liabilities.


 


Certain
Provisions of the Company’ s Articles of Incorporation and Bylaws and Virginia Law


 


General


 


The
Company’s articles of incorporation and bylaws contain provisions that could make more difficult an acquisition of the Company
by means of a tender offer, a proxy contest or otherwise. In addition, Virginia has two antitakeover statutes, the Affiliated
Transactions Statute and the Control Share Acquisitions Statute, that could make it more difficult for another party to acquire
the Company without the approval of the Company’s board of directors. These provisions are expected to discourage specific
types of coercive takeover practices and inadequate takeover bids as well as to encourage persons seeking to acquire control to
first negotiate with the Company. Although these provisions may have the effect of delaying, deferring or preventing a change
in control, the Company believes that the benefits of increased protection through the potential ability to negotiate with the
proponent of an unfriendly or unsolicited proposal to acquire or restructure the Company outweigh the disadvantages of discouraging
these proposals because, among other things, negotiation of such proposals could result in an improvement of their terms.


 






    	 



    	 



    

Shareholder
Approval of Certain Transactions


 


The
Company’s articles of incorporation provide that an amendment of the Company’s articles of incorporation, a plan of
merger or share exchange, a transaction involving the sale of all or substantially all of the Company’s assets other than
in the regular course of business, and a plan of dissolution must be approved by the vote of a majority of all the votes entitled
to be cast on such transactions by each voting group entitled to vote on the transaction at a meeting at which a quorum of the
voting group is present, provided that the transaction has been approved and recommended by at least two-thirds of the directors
in office at the time of such approval and recommendation. If the transaction is not so approved and recommended by two-thirds
of the directors in office, then the transaction must be approved by the vote of eighty percent (80%) or more of all the
votes entitled to be cast on such transactions by each voting group entitled to vote on the transaction.


 


Classified
Board of Directors


 


The
Company’s articles of incorporation provide that the board of directors shall be divided into three classes as nearly equal
in number as possible. The members of each class are elected for a term of three years and until their successors are elected
and qualified. As a result, approximately
one third of the members of the board of directors are elected each year, and two annual meetings are required for the Company’s
shareholders to change a majority of the members constituting the board of directors.





 


Removal
of Directors


 


The
Company’ s bylaws currently provide that any director may be removed from office at a meeting called expressly for that
purpose by the vote of stockholders holding a majority of the shares entitled to vote at an election of directors.


 


Advance
Notification Requirements


 


The
Company’s bylaws prescribe the procedure that a shareholder must follow to nominate directors or to bring other business
before shareholders’ meetings outside of the proxy statement process. For a shareholder to nominate a candidate for director
or to bring other business before at an annual meeting of shareholders, written notice of nomination must be received by the Company’s
Corporate Secretary not less than 30 days prior to the first anniversary date of the initial notice given to shareholders of record
on the record date for the previous annual meeting by or at the direction of the board of directors; provided, however, that such
notice shall not be required to be given more than 90 days prior to the annual meeting of shareholders. Notice of nomination of
a director must describe various matters regarding the nominee and the shareholder giving the notice. Notice of other business
to be brought before the meeting must include a description of the proposed business, the reasons therefore, and other specified
matters regarding the shareholder giving the notice.