Voting Stock

Voting Stock

Within corporate governance, voting stock possesses great power and influence. Shareholders influence a company’s direction and decision-making by exercising their voting rights. Voting stock gives shareholders a voice and a way to communicate their choices, worries, and convictions. By enabling people to vote in the choice of board members, the endorsement of essential resolutions, and the organisation’s direction, it represents the essence of democracy inside the corporate framework. However, the subtleties and intricacies of voting stock go well beyond the surface, entailing complicated systems, rules, and the equilibrium between shareholders’ rights and management’s power. 

What is voting stock? 

Voting stock, sometimes referred to as common stock or ordinary shares, denotes ownership in a business and allows shareholders to cast ballots on specific decisions about the governance of the business.  

Voting stock typically contains one vote per share, and stockholders may use their votes to influence corporate decisions. These choices may involve choosing the board of directors, approving significant business deals like mergers and acquisitions, or establishing crucial rules.  

Voting stock plays a significant role in corporate democracy by giving shareholders the ability to shape important decisions and giving shareholders a voice in determining the direction of the company. 

Understanding voting stock 

Shareholders who own voting stocks can use their votes to influence business decisions. Although some shares of voting stock may be associated with varied voting rights, each share typically entitles the holder to one vote.  

Shareholders can vote on several issues during general meetings, including choosing the board of directors, authorising mergers and acquisitions, or changing the bylaws of the business. The voting rights are typically distributed in proportion to the number of shares held, allowing shareholders with higher stakes to influence the outcome more.  

Depending on the precise requirements established in the company’s governing papers and relevant regulations, the votes are counted, and decisions are taken based on a majority or supermajority vote. 

Importance of voting stock 

Voting stock is essential in the stock market since it enables shareholders to participate actively in a company’s decision-making processes. Voting rights give shareholders a say in determining the business’s direction, policies, and governance practices. This encourages accountability, openness, and sound corporate governance.  

Voting stockholders can appoint directors who share their interests, consent to significant business transactions, and have a say in critical corporate decisions. The right to vote on essential issues means that shareholders may advance value creation, safeguard their interests, and influence changes inside the business. In the end, voting stock is essential for maintaining shareholder democracy and making sure that investors have a stake in the businesses they support. 

Advantages of voting stock 

The following are the advantages of voting stocks: 

  • Voting stock allows investors to participate in decision-making and shape the company’s future, enabling shareholders to make decisions like choosing the board of directors or approving significant deals. 
  • Voting stockholders can use their privileges to support effective company governance. They can vote on crucial matters like executive salary, auditor choice, or adopting moral guidelines that encourage accountability and openness. 
  • Shareholders’ voting rights allow them to defend their interests and have a say in decisions that could affect the value of their investment. They can use their vote to oppose decisions they believe would reduce shareholder value, including dilution brought on by excessive share issues. 
  • Having voting shares gives shareholders a way to be active. By using their right to vote, shareholders can communicate with the company and offer suggestions for improvement while creating long-term value. 
  • Shareholders can influence changes inside a firm by exercising their voting stock. They can influence the company’s policies and procedures by making resolution proposals or choosing board members who support their preferred strategy. 

Example of voting stock 

Consider the common stock of XYZ corporation as an example of a voting stock. The common stock of XYZ corporation entitles each shareholder to one vote, enabling them to participate in corporate decision-making. For instance, shareholders holding voting shares may vote to choose the board of directors at the annual general meeting of XYZ corporation. Additionally, they can vote on issues like adopting crucial policies or approving CEO remuneration packages. The results of the votes influence group decisions and XYZ corporation’s governance and direction. 

Frequently Asked Questions

Voting stocks enable shareholders to cast ballots at corporate meetings on specific issues. Shareholders may vote on matters such as electing board members, authorising mergers, or enacting corporate policy, with each voting stock typically carrying one vote. The voting results influence the group decisions and direct the company’s course. 

 

 

 

Investors have two options when buying company shares: voting stocks and non-voting stocks. The privileges and rights attached to each category of stock are where the two differ most significantly.  

As their name indicates, voting stocks allow shareholders to decide on crucial business issues like choosing the company’s board of directors or critical business decisions. On the other hand, shareholders cannot vote in the case of non-voting stocks. Instead, capital gains and dividends are often what give them their worth.  

While voting stocks give shareholders a voice in corporate affairs, non-voting stocks might be favoured by people more focused on maximising their financial returns than participating directly in decision-making. 

 

 

 

Individual tastes and investment philosophies determine the worth of voting stocks. Voting rights can provide shareholders with a voice in corporate decisions. Still, it’s essential to consider elements like the organisation’s governance structure and the practical importance of voting rights. 

 

 

 

 

Individual shareholders have the opportunity to take part in business decision-making through voting stocks. Investors who own voting shares can participate in decisions affecting the company’s direction by voting on issues like choosing the board of directors, authorising mergers, or adopting corporate policies. 

 

 

 

 

Voting stocks allow stockholders to use voting privileges to direct the company’s course. Shareholders can jointly influence the company’s strategy, policies, and governance practices by voting on significant issues, such as choosing the board of directors or approving significant decisions. 

 

 

 

 

    Read the Latest Market Journal

    Financial Sectors Thriving: Top Traded Counters in April 2024

    Published on May 21, 2024 23 

    At a glance: The Federal Reserve (Fed) held interest rates steady at 5.25% to 5.5%...

    One Dollar at a Time: The Potential of Fractional Shares

    Published on May 20, 2024 48 

    Table of contents 1. Introduction 2. Dollar-Cost Averaging 3. Popularity of Dollar-Cost Averaging 4. Small...

    Unit Trusts vs Exchange Traded Funds (ETFs) – Which is better for your portfolio?

    Published on May 20, 2024 43 

    Imagine you are dining at a nice restaurant, feeling overwhelmed by the variety of seemingly...

    Weekly Updates 20/5/24 – 24/5/24

    Published on May 20, 2024 18 

    This weekly update is designed to help you stay informed and relate economic and company...

    What is CFD? With 2 Practical Examples

    Published on May 15, 2024 101 

    In this article, you will learn what CFD (Contract for Difference) is, the costs and...

    What is ESG investing, and why is it important?

    Published on May 15, 2024 96 

    Over the last five years, Environmental, Social, and Governance (ESG) investing has evolved from being...

    What are fixed-income funds?

    Published on May 15, 2024 51 

    In the diverse world of unit trusts, various funds employ distinct investment strategies aligned with...

    Hong Kong Value Stocks Q2 2024

    Published on May 14, 2024 123 

    After a long period of sluggishness, Hong Kong market has begun to pick up. The...

    Contact us to Open an Account

    Need Assistance? Share your Details and we’ll get back to you

    IMPORTANT INFORMATION

    This material is provided by Phillip Capital Management (S) Ltd (“PCM”) for general information only and does not constitute a recommendation, an offer to sell, or a solicitation of any offer to invest in any of the exchange-traded fund (“ETF”) or the unit trust (“Products”) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. You should read the Prospectus and the accompanying Product Highlights Sheet (“PHS”) for key features, key risks and other important information of the Products and obtain advice from a financial adviser (“FA“) pursuant to a separate engagement before making a commitment to invest in the Products. In the event that you choose not to obtain advice from a FA, you should assess whether the Products are suitable for you before proceeding to invest. A copy of the Prospectus and PHS are available from PCM, any of its Participating Dealers (“PDs“) for the ETF, or any of its authorised distributors for the unit trust managed by PCM.  

    An ETF is not like a typical unit trust as the units of the ETF (the “Units“) are to be listed and traded like any share on the Singapore Exchange Securities Trading Limited (“SGX-ST”). Listing on the SGX-ST does not guarantee a liquid market for the Units which may be traded at prices above or below its NAV or may be suspended or delisted. Investors may buy or sell the Units on SGX-ST when it is listed. Investors cannot create or redeem Units directly with PCM and have no rights to request PCM to redeem or purchase their Units. Creation and redemption of Units are through PDs if investors are clients of the PDs, who have no obligation to agree to create or redeem Units on behalf of any investor and may impose terms and conditions in connection with such creation or redemption orders. Please refer to the Prospectus of the ETF for more details.  

    Investments are subject to investment risks including the possible loss of the principal amount invested. The purchase of a unit in a fund is not the same as placing your money on deposit with a bank or deposit-taking company. There is no guarantee as to the amount of capital invested or return received. The value of the units and the income accruing to the units may fall or rise. Past performance is not necessarily indicative of the future or likely performance of the Products. There can be no assurance that investment objectives will be achieved.  

    Where applicable, fund(s) may invest in financial derivatives and/or participate in securities lending and repurchase transactions for the purpose of hedging and/or efficient portfolio management, subject to the relevant regulatory requirements. PCM reserves the discretion to determine if currency exposure should be hedged actively, passively or not at all, in the best interest of the Products.  

    The regular dividend distributions, out of either income and/or capital, are not guaranteed and subject to PCM’s discretion. Past payout yields and payments do not represent future payout yields and payments. Such dividend distributions will reduce the available capital for reinvestment and may result in an immediate decrease in the net asset value (“NAV”) of the Products. Please refer to <www.phillipfunds.com> for more information in relation to the dividend distributions.  

    The information provided herein may be obtained or compiled from public and/or third party sources that PCM has no reason to believe are unreliable. Any opinion or view herein is an expression of belief of the individual author or the indicated source (as applicable) only. PCM makes no representation or warranty that such information is accurate, complete, verified or should be relied upon as such. The information does not constitute, and should not be used as a substitute for tax, legal or investment advice.  

    The information herein are not for any person in any jurisdiction or country where such distribution or availability for use would contravene any applicable law or regulation or would subject PCM to any registration or licensing requirement in such jurisdiction or country. The Products is not offered to U.S. Persons. PhillipCapital Group of Companies, including PCM, their affiliates and/or their officers, directors and/or employees may own or have positions in the Products. Any member of the PhillipCapital Group of Companies may have acted upon or used the information, analyses and opinions herein before they have been published. 

    This advertisement has not been reviewed by the Monetary Authority of Singapore.  

     

    Phillip Capital Management (S) Ltd (Co. Reg. No. 199905233W)  
    250 North Bridge Road #06-00, Raffles City Tower ,Singapore 179101 
    Tel: (65) 6230 8133 Fax: (65) 65383066 www.phillipfunds.com