Voting Shares Definition Types and Examples

Voting Shares Definition Types and Examples

Voting Shares: Definition, Types, and Examples

What Are Voting Shares?

Voting shares give stockholders the right to vote on corporate policymaking. Common stock typically represents voting shares, while preferred stock may not have voting rights.

Key Takeaways

  • Investors with voting shares have a say in a company’s corporate policy and major actions, such as mergers.
  • Companies can offer different classes of shares with or without voting rights.
  • Google and Berkshire Hathaway are examples of companies with voting and non-voting stock.

How Voting Shares Work

Owners of voting shares can participate in decisions about a company’s future. For example, they can vote on acquisition offers or other important matters.

Shareholders with voting shares receive relevant communications from the company. Voting or not voting does not directly affect share ownership or value, although subsequent actions may impact the company’s market value.

Special Considerations

Activist investors often encourage holders of voting shares to support actions they favor. Hostile bids to acquire a company may target voting shareholders to effect change in the organization.

Voting shareholders have the power to reject a sale offer if they don’t believe it aligns with the company’s valuation.

Types of Voting Shares

Shareholders may have different voting power based on the types of shares they hold. Some shares may grant multiple votes, while others have no voting power.

Management may also issue new voting shares or shares without voting power. These different types of shares may have varying market values.

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Example of Voting Shares

Google has multiple classes of shares. Class A shares (GOOGL) have voting rights, while Class C shares (GOOG) do not. Google also has non-traded Class B shares that carry supervoting privileges.

Berkshire Hathaway, led by Warren Buffett, also has multiple share classes. Class A shares (BRK.A) have voting rights, while Class B shares have limited say in company matters.

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