Table of Contents

voting rights
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Before owning shares in any corporation, shareholders ought to be aware of their rights. This allows them to make moral, and informed decisions. Having reasonable and timely access to information about matters impacting their investments, and knowledge of the market they invest in, its engagement norms allows an investor to make investments proficiently.

In addition to rights, shareholders must be aware of any restrictions or limitations pertaining to their rights. This is particularly relevant when it comes to the voting rights of the investors. Voting rights of the shareholders can be employed for decision-making matters like the election of the board of directors. Their eligibility to approve significant business transactions, any ability to submit dissident resolutions at an annual meeting, how to participate in share voting, either in person or electronically, and opportunities and responsibilities for shareholder engagement in situations like cumulative voting, in order to exercise their rights properly.

Impact of Voting Rights

Shareholders have robust influential powers as they can select the board of directors for large public corporations. However, voting rights do not always mean that shareholders have substantial power in the decision-making of the company. Often, directors hold a sizeable share in privately owned businesses. As a result, minority shareholders often have little to negligible influence on the choice of directors. An individual may own a majority stake in the company’s shares, significantly diminishing the leverage of minority shareholders. Even though shareholders can cast ballots in elections and resolutions, their decisions may not have an effect on crucial business decisions.

Understanding Stockholder Voting Rights

The rights of shareholders, including the power to vote on corporate affairs, are governed by provisions in the rules and regulations of the company. When these clauses are observed in the context of trade laws governing the jurisdiction of the company, we observe a series of restrictions on shareholders’ rights. The corporation specifies shareholders’ rights in the shareholder’s agreement. Shareholders have the privilege to vote on corporate guidelines, decisions, the composition of the board of directors, and other matters. Generally, these votes are conducted during the company’s annual shareholder meeting.

 Shareholders do not have the right to vote on fundamental day-to-day operational or management concerns. A corporation’s managers and board of directors are responsible for the management of its daily operations. Even though shareholders are not concerned with the daily logistical and managerial matters of the company, they cast ballots on significant corporate matters. These matters may comprise amendments to the charter, the election of directors, or their removal.

 Owners of preference shares do not have voting privileges. This is a contrast to ordinary shareholders whose votes have values that are proportionate to their shares. All shareholders are included in corporate records, along with a record date prior to the meeting. Shareholders who were not on the record by the specified date are ineligible to vote.

Voting and Quorums

The quorum refers to the minimum number of members that are required to be present in a meeting or a vote, in order to consider it valid. Oftentimes, corporates have specified regulations that designate the quorum at shareholder meetings.

 A shareholder may be attending or send a representative vote. When the shareholders at the meeting are more than 50% of the corporation’s shares, a quorum is generally obtained. There might be specific provisions in state laws, that allow approval of a resolution without meeting a designated quorum. 

 In normal circumstances, a simple majority of share votes is regarded as enough to pass a resolution. However, some unique circumstances demand more than 75% of the shareholder’s support. These circumstances include the merger and dissolution of the company.  

Proxy Voting

In order to cast their vote, a shareholder may be present in attendance or cast a proxy vote. In situations where the shareholder is unable or unwilling to attend the annual meeting of the company, they may delegate their vote. This is also applicable to emergency meetings.  The delegation of votes does not entail forfeiting the ownership of the shares.

Proxy materials are made available online by the concerned firm. Typically, these documents consist of an annual report, a proxy statement outlining the items up for a vote, and a proxy card with voting instructions. Investors who are qualified to vote at the annual general meeting may also get materials through the mail (AGM).
The individual designated as proxies is expected to cast the vote in accordance with the proxy card. Before the deadline, proxy votes may be cast through the mail, phone, or online. Normally, this happens a day before the shareholder meeting. They can either vote for, against, abstain, or avoid casting.


Voting is the primary right of a shareholder. However, not all shareholders have this privilege. Preference shareholders compromise this right for the benefit of accessing preferential distribution of dividends and profits. Generally, voting is conducted in the annual general meeting for the appointment of the board of directors. This plays an important role in directing the operation and setting the policies of the company. Ordinarily, a vote requires a simple majority. This is not true for unique circumstances like mergers and dissolution of the company. A voter can cast their vote by attending or sending a proxy voter.  

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