What are 'Voting Shares'

Voting shares are shares that give the stockholder the right to vote on matters of corporate policy making as well as who will compose the members of the board of directors.

BREAKING DOWN 'Voting Shares'

Different classes of shares, such as preferred stock, sometimes do not allow for voting rights. The holders of voting shares have the ability to weigh in on decisions about a company’s future direction. For instance, if a company is considering an acquisition offer by another company or a group of investors, the owners of voting shares would be able to cast their vote on the offer.

Shareholders who own voting shares typically receive regular communications from the company regarding matters that would require a vote for the organization to act. The decision to vote or not vote on such issues does not directly affect their ownership of shares or their value. There may be subsequent actions that result from the votes that may affect market value.

How Voting Shares Can Affect the Direction of a Company

It is not uncommon for so-called activist investors to seek the support of the owners who hold voting shares to cast their vote in favor of an action or decision the activist investor wants the company to pursue. Hostile bids to acquire a company may see the prospective buyers campaign to the holders of voting shares in the hopes of gathering enough support to effect a new direction at the company. This may include a change of the current board of directors, which would allow for further changes at the organization such as the removal and replacement of executive officers of the company.

If the board of directors agrees to such actions as the sale of the company, the approval process for the deal includes a vote among shareholders who own voting shares. The owners of voting shares could reject an offer if they believe the bid does not meet their valuation of the company.

Depending on the types of shares issued, shareholders may have varying levels of voting power. For example, a company may reserve a class of shares for the founders, upper management, and early employees of the company that grants each of them several votes for each share they own. They then might issue additional voting shares that carry just one vote per share. Shares that hold no voting power may also be issued.

Such an arrangement would grant a segment of stakeholders greater individual voting power for the decisions that shape the organization. The different types of voting shares might also have different market value, particularly if new shares are offered through a stock split.

RELATED TERMS
  1. Statutory Voting

    Statutory voting is a corporate voting procedure where each shareholder ...
  2. Voting Right

    A voting right is the right given to a stockholder to vote on ...
  3. Cumulative Voting

    Cumulative voting is the process of electing a company's directors; ...
  4. Proxy Vote

    A proxy vote is a ballot cast by one person or firm on behalf ...
  5. Voting Trust Certificate

    A voting trust certificate is a document issued by a corporation ...
  6. Voting Trust

    A voting trust is a legal trust created to combine the voting ...
Related Articles
  1. Investing

    Proxy Voting Gives Fund Shareholders a Say

    You have the right to take part in important company decisions by proxy.
  2. Investing

    BlackRock Voted to Replace Tesla's Musk With Independent Chairman

    Funds run by BlackRock Inc voted in favor of a recent shareholder proposal that would have required Tesla Inc to replace Elon Musk with an independent chairman.
  3. Investing

    Snap Excluded From S&P 500 Indices

    Snap's voting rights structure has prompted the S&P 500 to exclude it from its indices.
  4. Investing

    Britain Votes to Leave the European Union

    The British people have voted to leave the European Union.
  5. Tech

    How Blockchain Technology Can Prevent Voter Fraud

    As a technology, blockchain is quickly becoming unrivaled. One of the biggest problems that blockchain’s decentralized muscle can solve is voter fraud.
  6. Investing

    Why the AB InBev Miller Merger Is More at Risk

    As shareholder voting gets underway on the $100 billion merger of SABMiller (NASDAQOTH: SBMRY) with Anheuser-Busch InBev (NYSE: BUD), the risk of the deal getting blocked by a small group of ...
  7. Investing

    What are Class B Shares?

    Class B shares are one classification of common stock issued by corporations.
  8. Insights

    A Breakdown on How the Stock Market Works

    Learn what it means to own stocks and shares, why shares exist, and how you buy and sell them.
RELATED FAQS
  1. Do Shareholders Get a Say in a Firm's Operation?

    Stock ownership often provides a vote on board membership and other issues put out for shareholder approval. Read Answer >>
  2. Why would a company have multiple share classes, and what are super voting shares?

    Before investing in a company with multiple share classes, be sure to learn the difference between them. Read Answer >>
  3. Do convertible bonds have voting rights?

    Convertible bonds usually have no voting rights until they are converted. Even after conversion, they may not be granted ... Read Answer >>
  4. How many votes am I entitled to, if I own ordinary shares of a company?

    Understand what an ordinary share is and how it may benefit investors. Learn how many votes an investor is entitled to, if ... Read Answer >>
  5. What rights do all common shareholders have?

    Learn what rights all common shareholders have, and understand the remedies that can be taken if those rights are violated ... Read Answer >>
Trading Center