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Finance: What is non-voting stock? 4 Views
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What is non-voting stock? Non voting stock is a class of stock that carries no voting rights on agenda items subject to shareholder vote. While some forms of common stock have no voting rights, the most common type of non-voting stock is preferred stock, which is often categorized more as debt than stock. This is because preferred stock pays an annual coupon amount and has a liquidity preference position ahead of common shareholders.
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Transcript
- 00:00
finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't
- 00:08
vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.
- 00:13
understand that notion. but really that's it in most cases common stock carries
- 00:17
with it the right to vote. and in fact it's the common shareholders who elect
- 00:22
the board of directors. but every now and then a potentially hostile investor
Full Transcript
- 00:26
comes along and buys or wants to buy a big chunk of stock in a company. well the
- 00:32
amount might be a block large enough to elect that potentially hostile investor
- 00:37
slate or the group of people that investor wants to place on the board to
- 00:40
represent her evil intentions .when that happens companies will often create a
- 00:45
class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]
- 00:51
voting rights stripped away .that way the investor can own an economic interest in
- 00:56
the company but not monkey with the board.
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