What Is Statutory Voting?

Statutory voting is a corporate voting procedure in which each shareholder is entitled to one vote per share and votes must be divided evenly among the candidates or issues being voted on. Statutory voting, sometimes known as straight voting, is one of two stockholder voting procedures and the more common option.

Statutory and cumulative voting are the two procedures for allowing shareholders to vote on issues or board members, with statutory being the more common of the two.

How Statutory Voting Works

In statutory voting, if you owned 50 shares and were voting on six board of director positions, you could cast 50 votes for each board member, for a total of 300 votes. You could not cast 20 votes for each of five board members and 200 for the sixth.

Statutory voting is a voting system that requires that the votes are divided evenly among the candidates or issues being voted on and each share earns one vote. There are other ways of voting.

Statutory Voting vs. Cumulative Voting

The other voting procedure is cumulative voting, which lets shareholders weight their votes toward particular candidates and improves minority shareholders' chances of influencing voting outcomes. In cumulative voting, you are allowed to vote disproportionately. If you own 50 shares and are voting on six board positions, you can cast 300 votes for one director and none for the five other directors, 20 votes for each of five board members and 200 for the sixth, or any number of other combinations.

To find out whether a company uses statutory voting or cumulative voting, consult its shareholders’ agreement.

Key Takeaways

  • Statutory voting, also known as straight voting, means that shareholders have one vote per share and that votes must be evenly divided among issues.
  • The other shareholder voting procedure is cumulative voting, which allows votes to be weighted based on the shareholder's preference.
  • Cumulative voting improves a minority shareholder's chance of influencing a vote.