1c. Rights of a Common Shareholder

Statutory Voting

100 votes maximum are allowed for EACH directorship. In TOTAL, 600 votes are cast.

Cumulative Voting

6 directorships x 100 votes. = 600 votes total which may be voted in any manner. one could vote 500 for 1 director, 100 for another and 0 for the other 4 directors.

Common Stock with different classes

Class A stock= could be issued to family members which would have all voting rights. Class B stock= to public which could have none or limited voting rights.

Right to inspect books and records

Common shareholders may inspect the books and records of a company. Does not happen since audited financial statements are required to be sent to all shareholders.

Right to Vote

Common stockholders vote at the company's annual meeting. Vote for board of directors, matters that affect share holder's "ownership interest".

Items that do NOT require a shareholder vote

Declare a cash dividend; declare a stock dividend; declare a rights distribution; repurchase shares for its treasury.

Items that require a shareholder Vote

Declare a stock split; declare a reverse stock split; issue convertible bonds or preferred stock; issue stock options to officers on a preferential basis.

Preemptive Right

If a corporation issues more shares, common stockholders have the right to buy before anyone else.

Negotiable Securities

Shares that can be traded.

Non-Negotiable securities

shares that can NOT be traded.

Each share holder gets 1 vote per share

the two voting methods are: statutory voting and Cumulative.

Proxies

voting cards sent out to shareholders who could not make it to annual meeting. These proxies are required to so they do not have an unfair advantage as they typically schedule these meetings in very random locations most voters would not want to go to.

Right To Corporate Assets Upon Dissolution

If corporation goes bankrupt or is dissolved, the common stock holder is paid last ( if any assets remain).

Right to Transfer ownership

Common Shareholders have the right to sell their shares to anyone else without Restriction. Their shares are negotiable.

Right To corporate distributions

when market price rise too high a company will pay a cash dividend, stock dividend or it will "split" its stock (usually when stock price is too high, lowering it to make it more accessible to investors.)