Question
Company with Dual class structureCompany with one shareThesisIn the dual system, two or more classes of shares have different rights in voting for each class.All
Company with Dual class structureCompany with one shareThesisIn the dual system, two or more classes of shares have different rights in voting for each class.All the shareholder having shares have a equal right of voting in companyEvidenceAccess is given to a class of shares that provide great control and voting rights and besides this, the general public gets less power in voting.Even if the shareholder has 1.5 shares in the company, then also he will get one vote.BridgeIn this, shareholders with control have different kinds of shares and they have a right to vote, but the shares issued in open market where the public used to subscribe to them are different kinds of shares and they don't have a right to vote in company.Their company belongs to only one kind of share and it is issued to mainly the people who have decisions right in the company. So they all have equal rights to vote in the company.
Explanation:
A shareholder can also be a person, a company, or any organization which holds share in a company. At Least he should own a minimum of one share in a company's share to make it a partial owner. They are also known as stockholders, and they have the right to vote in the company.
Thesis:
Companies with dual class structure have two types of shareholders: the equity shareholders and the preference shareholders.
Common shareholders own a company's common stock. They vote on matters which are related to the company. They manage the company, take the right decisions and file a case against the company for any wrong activities which are harmful for the organization, environment and society.
Preference shareholders are less in number. They don't own a share of the company's common stock and don't possess any voting rights and they don't manage the company at all. Rather, they are entitled to a fixed amount of annual dividend before any dividend given to equity shares.
Companies which have only common shares or A class shares always carry voting rights but in some cases, it depends upon the matters of the organization where voting rights differ. Otherwise they carry equal voting rights in the organization. This gives them to take all the decisions related to the company and decide the strategy and target for the common. On voting only, they decide among themselves who will lead the Board of Directors(BoD) seats. Each shareholder has one right to vote regardless of the number of shares they hold.
Evidence:
In a company with dual class structure, a company offers class A and class B shares to differentiate between shares with different dividend payouts ratio and with different voting rights. A company offers one class of stock to the general public which provides limited voting rights as comparative to the other common shares.
The common shares arereserved for executives, company founders, and their family members. If a company has two types of common shares, then one will be issued to executives and the other one to founders and to their family members.
The common shares include voting power. The shares which belong to company founders and to their family members are high class shares and for the investors or employees it is for controlling the company and making fruitful decisions for the success of the company..
For companies with only common shares or A class shares, shareholder meetings at a time can include multiple issues to vote on. Shareholders get one vote per member like only full shares count when it belongs to shareholder voting. So, if a shareholder possesses 1.5 shares of share in a company, he will get only one vote.
For electing candidates to the Board of Directors(BoD), then shareholders may have the option of cumulative or statutory voting. In statutory voting, shareholders vote for or against a candidate. Cumulative voting allows the shareholder to pool the total number of votes and use them across issues.
Bridge:
Mainly company favor for dual class of share. Because in the small companies, it's the individual who has the majority of control in the company But in large companies, it's the general shareholder capital which covers a major portion in the company and they are highly risky also. But for the growth and for availing the listing gains, companies need to issue shares in the general public and avail the opportunity in the market.
And in the company having only common shares or A class shares, shareholders exercise voting rights in person in the board meeting or special meeting where voting has to be performed. This has a significant influence on the shareholders and they can take the major decisions mutually.
Reference link:https://www.investopedia.com/articles/fundamental/04/092204.asp
https://www.nerdwallet.com/article/investing/what-is-a-stock
my question is : should all shareholder have an equal voting rights ? I need specific example as an evidence from "real life"
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