Controlling Interest: What It Is Plus Advantages, Examples

Controlling Interest

Investopedia / Madelyn Goodnight

What Is a Controlling Interest?

The term controlling interest refers to a situation that arises when a shareholder or a group acting in kind holds the majority of a company's voting stock. Having a controlling interest gives the holding entity(s) significant influence over any corporate actions. Shareholders who have a controlling interest are often able to direct the course of a company and make the most strategic and operational decisions.

Key Takeaways

  • A controlling interest is when a shareholder holds a majority of a company's voting stock.
  • A shareholder does not have to have majority ownership in a company to have a controlling interest as long as they own a significant portion of its voting shares.
  • Having a controlling interest provides a shareholder with significant power and influence within a company.
  • Ownership of operational and strategic decision-making processes is given to a shareholder with a controlling interest.
  • A controlling interest grants leverage to increase a shareholder's stake in a company in a merger or acquisition.

Understanding a Controlling Interest

A controlling interest is, by definition, at least 50% of the outstanding shares of a given company plus one. However, a person or group can achieve a controlling interest with less than 50% ownership in a company if that person or group owns a significant portion of its voting shares, as not every share carries a vote in shareholder meetings.

Having a controlling interest gives a shareholder or group of shareholders significant influence over the actions of a company. A party can achieve a controlling interest as long as the ownership stake in a company is proportionately substantial relative to the total voting stock.

With the majority of large public companies, for example, a shareholder with much less than 50% of the outstanding shares may still have a lot of influence at the company. Single shareholders with as little as 5% to 10% ownership can push for seats on the board or enact changes at shareholder meetings by publicly lobbying for them, giving them control.

Voting rights allow shareholders to elect directors, change direction in the company, and express their views to management and directors.

Advantages of a Controlling Interest

The upside of holding a controlling interest in a company can come in many forms. First, a controlling interest gives a person or group of people substantial influence. Since, by definition, the party with controlling interest automatically has the majority vote, it allows an individual to veto or overturn decisions made by existing board members. This gives people who have a controlling interest in a company the ability to take ownership of the operational and strategic decision-making processes.

In some companies, if an individual has the controlling interest, the firm automatically makes that person the chair of the company's board of directors. This gives that individual even more power than the majority vote. In addition to retaining veto power over a board vote, the individual can effectively make board decisions on their own, including hiring C-level executives.

A controlling interest grants an investor the leverage to increase their shareholding stake in a company in the event of a merger or acquisition. For example, in a strategic merger that involves a share swap, the investor who holds controlling interest would structure a deal that continues to give them majority voting power over the new entity.

Real-World Example of a Controlling Interest

Meta (Formerly Facebook)

Facebook (now Meta) (META) founder and chief executive officer (CEO) Mark Zuckerberg has a controlling interest in the social media giant. According to Facebook's 2021 proxy statement, Zuckerberg owns about 360 million Class B shares. He also maintains control on voting for another 32 million with a total voting power of 57.7%.


Google's parent company Alphabet (GOOGL) structured its shares in a similar way to Facebook. Larry Page, Sergey Brin, and Eric Schmidt each have a controlling interest, owning over 60% of the company’s B voting shares that carry 10 votes per share. In contrast, the tech titan’s Class A shares have only one vote per share, while the company's Class C (GOOG) shares have no voting rights.

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  1. Facebook, Investor Relations. "Schedule 14A Information Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ), Facebook, 2021 Annual Meeting and Proxy Statement," Page 20 and 61. Accessed Dec. 5, 2021.