What are voting shares?

Voting shares are a type of stock that investors can purchase in publicly traded companies. They grant shareholders the right to express their opinions on certain company decisions, such as electing board members and taking other actions related to the company.

Definition and Example of Voting Shares

Voting shares are the shares of stock offered to investors by public companies and come with voting rights in the company. Typically, voting shares are common stocks, which are the most common type of shares issued by companies. All common stocks come with voting rights. However, a company may choose to offer more than one class of common stock, with each class having a different level of voting rights.

For example, Google offers four different types of shares: Class A common stock, Class B common stock, Class C capital stock, and preferred stock. Both Class A common stock and Class B common stock are voting shares, meaning that shareholders who own those shares have the right to vote on company matters. However, Class A shareholders are entitled to one vote per share, while Class B shareholders are entitled to ten votes per share.

How Voting Shares Work

When you purchase voting shares in a company – typically in the form of common stock – you have the right to vote on corporate matters at the company’s annual general meeting as well as at special meetings throughout the year.

Before voting, the public company sends a proxy statement to each owner of voting shares, informing them that voting will take place at the meeting and the matters that will be voted on. Topics usually voted on include the election of board members, approval of executive compensation, and the adoption of proposals made by other shareholders.

Note: If you own voting shares, you can exercise your voting right by attending a shareholder meeting. You can also vote by proxy, which does not require you to attend the meeting in person.

Types of Voting Shares

A company may offer more than one class of voting shares. When there is one class that has more voting rights than another, it may trade at a higher price. In many cases, the class with the most voting rights does not trade publicly at all; instead, it is designed to give certain individuals greater authority within the company.

Individual investors cannot purchase Class B shares, which are only available to company employees. In fact, Google founders Larry Page and Sergey Brin own enough Class B shares to determine the outcome of corporate decisions, including elections to the company’s board of directors.

Google also prohibits individual investors from owning Class B shares. If a Class B shareholder sells or transfers their shares to someone else, those shares automatically convert into Class A shares, which come with only one vote per share. The only exception is when one of Google’s founders transfers shares to the other or when a Class B shareholder transfers shares for tax or estate planning purposes.

Voting Shares vs. Non-Voting Shares

Voting shares (also known as common stock) are the most common type of shares issued by companies, but they are not the only type. Many companies also issue preferred shares, which do not come with voting rights.

Instead of
From the voting rights, preferred stockholders have the right to receive dividends before common stockholders. They also have a greater legal claim to funds if the company goes bankrupt or into liquidation, meaning they will receive their money before common stockholders and other creditors.

Are Voting Shares Worth It?

When you invest in a company that offers multiple types of stock, you’ll have to decide which type is right for you. Often, you’ll have to choose between common stock (which comes with voting rights) and preferred stock (which does not come with voting rights but pays dividends before common stock).

Ultimately, your choice between the two types depends on your investment goals. Both types of stock give you ownership in the company. While you have the potential to earn capital gains with both types of stock, common stock is more likely to increase in price, providing greater long-term profit potential.

On the other hand, preferred stockholders receive dividend payments before common stockholders. So if you are investing for steady income and are willing to forgo capital gains and voting rights for that, preferred stock may be right for you.

What Do Voting Shares Mean for Individual Investors?

As an individual investor, you may be surprised to learn that you have some power in directing the companies you invest in. Your common stock gives you the right to vote on company issues at the annual shareholders meeting or special meetings throughout the year.

Note: In some companies, voting rights may not be as significant as they seem. Large institutional investors, such as mutual funds or individual stockholders, typically have greater control over the voting outcomes.

How to Get Voting Shares

Companies must issue at least one class of common stock, allowing investors to obtain voting rights on company matters.

If you want to buy voting shares in a company, it’s important to understand the different types of stock the company issues. If the company offers multiple types of common stock as well as preferred stock, you’ll need to ensure that you purchase the correct type of stock.

You can research the different types of stock the company offers using the EDGAR database available through the Securities and Exchange Commission (SEC) in the United States.

Once you identify the shares you want to buy, you can purchase them through an existing or new online brokerage account. Simply log in to your account, search for the stock you want to buy, and place an order for the number of shares you wish to purchase.

Key Points

– Voting shares are a type of stock that gives investors the right to vote on company issues, including board members and executive compensation.

– Voting shares often come with common stock, although a company may offer more than one class of common stock with different levels of voting rights.

– A company can offer more than one class of voting shares, and when one class carries more voting rights than another, it may trade at a higher price.

– Voting shares differ from non-voting shares, where preferred stockholders receive dividend rights before common stockholders and have a greater legal claim to funds in the event of bankruptcy or liquidation.

– When investing in a company that provides multiple types of stock, you should choose the type that aligns with your investment goals, as common stock is more likely to rise in price, while preferred stockholders receive dividend payments before common stockholders.

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As an individual investor, you have some power in directing the companies you invest in through the common stock you own, but larger institutional investors may have greater control over voting results.

– To purchase voting shares, you must first understand the different types of shares that a company issues and ensure you are buying the correct type of stock. You can buy shares through an online brokerage account by researching the stocks you wish to purchase and placing an order for the number of shares you want to buy.

Source: https://www.thebalancemoney.com/what-are-voting-shares-5208378