What are Voting Rights?
Shareholders of corporations have voting rights on matters of corporate policy. For instance, they can vote on decisions about directors, about actions like mergers or acquisitions, and to approve dividends.
Who holds voting rights in a corporation?
All shareholders have voting rights. Shareholders have different numbers of votes depending on how many shares they own. Normally, common shares carry 1 vote per share. Only full shares count, so someone owning 1.5 shares would only get 1 vote. Preferred shares normally do not offer any voting rights, though preferred shareholders do get priority over dividends.
Shareholders are eligible to vote if they were listed as the owner of a share on a specific record date (a specified date that precedes the shareholder meeting). This means that shareholders who’ve bought shares very close to the meeting date are unlikely to be eligible to vote during that year’s meeting.
If a shareholder has more than 50% of the total shares, they have a controlling interest, as they will always win votes even if all other shareholders vote differently.
In many small, privately held companies, the officers and directors will usually retain well over 50% of shares between them. This means that minority shareholders may have little or no impact on major company issues.
What issues can shareholders vote on?
Shareholders do not vote on the day-to-day running of the company but instead vote on key corporate issues. The exact issues that they get to vote on will vary from company to company, but will normally include being able to vote to elect members of the company’s board of directors, to approve changes to the company’s charter, and on resolutions about mergers and acquisitions.
How do shareholders vote?
Shareholders can vote in person at the annual shareholder meeting. They can also vote by proxy or, in many cases, over the phone. Some companies also offer the option to vote over the internet.
Approving a resolution normally only requires a simple majority of votes. Some exceptional resolutions, such as merging or dissolving a company, may require a greater percentage of votes
Can shareholders vote out a CEO?
Shareholders cannot directly vote out the CEO, but they can vote for members of the board of directors who’ve promised to remove the CEO.
Voting rights are the rights of shareholders to vote on matters concerning the company’s policy and other matters. Typically shareholders have 1 vote per share. The more shares a shareholder owns, the stronger their voting power.