Lesson 2 of 7 · 13 min
Common shares: voting rights, share classes, callable and putable shares
Common shareholders own the company's residual value and govern it by voting; how votes are counted and how share classes are designed decide who really controls the board.
In short
- Common shares give a share of operating performance, voting rights and a residual claim in liquidation; dividends are not obligatory.
- Shareholders vote on directors, mergers and auditors, usually at the annual meeting, often by proxy.
- Statutory voting: one vote per share for each seat, so a majority holder wins every seat.
- Cumulative voting: votes = shares × seats being filled, and they can all go to one candidate. This gives minority holders a chance of board representation.
- Companies may issue classes of common shares with different voting, dividend or liquidation rights, often to keep control with founders.
- Callable shares let the issuer buy them back at a preset price; putable shares let the holder sell them back to the issuer at a preset price.
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