Voting Shares
/ˈvəʊtɪŋ ʃeəz/
Voting shares are company shares that give shareholders the right to vote on corporate decisions and elect the board of directors.
Voting shares are company shares that give shareholders the right to vote on corporate decisions and elect the board of directors.
Voting shares represent ownership stakes that come with decision-making power.
Each share typically grants one vote on company matters like board elections, major acquisitions, or changes to company structure.
These shares form the foundation of shareholder democracy in limited companies.
Voting shares provide both ownership rights and control influence, whilst non-voting shares only offer financial benefits like dividends.
Non-voting shares cannot participate in company decisions but may receive preferential treatment for distributions.
This distinction allows founders to raise capital whilst maintaining control.
Companies create multiple voting share classes to balance fundraising needs with control preferences.
Class A voting shares might carry ten votes each, whilst Class B shares carry one vote.
This structure lets founders retain decision-making power even after diluting their ownership percentage through investment rounds.
Founders usually hold the majority of voting shares initially, maintaining control over strategic decisions.
Early employees may receive voting shares through equity compensation schemes.
Investors often negotiate for voting shares or special voting rights on specific matters like board composition or major corporate changes.
Voting shares typically decide on director appointments, executive compensation, merger approvals, and constitutional changes.
Major transactions, dividend declarations, and share buyback programmes usually require shareholder votes.
The company's articles of association define which decisions need voting share approval versus board-level authority.
Voting shares often trade at a premium compared to non-voting equivalents due to their control value.
This "control premium" reflects the additional worth of decision-making power.
During valuations, voting shares may command higher prices, especially when control positions are at stake.
Voting shares rights can be modified through special resolutions requiring significant shareholder approval.
Changes typically need approval from affected share classes and may require court approval for complex restructuring.
The relevant company registry must be notified of any changes to voting rights structures.
