Contingent Voting Power

DEFINITION of 'Contingent Voting Power'

A provision granting voting rights to preferred shareholders when the company cannot uphold the obligations outlined in the preferred shareholder arrangement. Contingent voting powers offer the shareholders additional security for holding preferred instruments.

BREAKING DOWN 'Contingent Voting Power'

With preferred stock, the primary source of income is generated from dividends because capital appreciation is minimal. Contingent voting powers may come into effect when the firm fails to make the dividend, eliminating the revenue of the preferred group. Armed with the power to vote, preferred shareholders may seek to remedy the financial difficulties that are restricting dividends by voting in new directors.

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    Understand the usual voting rights of common stock shareholders, along with the importance of shareholders exercising their ... Read Answer >>
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    Learn about the advantages and disadvantages of preference shares to both investors and issuing companies, including the ... Read Answer >>
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    Learn about the differences between common and preferred shares. Explore situations where preferred shares have more favorable ... Read Answer >>
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    You don't get a direct say in a company's day-to-day operations, but, depending on whether you own voting or non-voting stock, ... Read Answer >>
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