Shareholder Rights (Statutory vs. Cumulative Voting)
Voting, preemptive rights, dividends when declared, inspection, limited liability.
What is Shareholder Rights (Statutory vs. Cumulative Voting)?
Common shareholders can vote for directors and major corporate changes, receive dividends when the board declares them, inspect books and records, and keep their proportionate ownership through preemptive rights. Liability is limited to the investment. Under statutory voting, each share gets one vote per seat. Under cumulative voting, votes can be concentrated on one candidate, which helps minority shareholders win a seat.
Shareholder Rights (Statutory vs. Cumulative Voting): a worked example
100 shares, 4 seats: statutory voting allows at most 100 votes per candidate; cumulative voting allows all 400 votes on one candidate.
More terms in Equities, Funds & Alternatives
Types of Preferred Stock
Cumulative, convertible, callable, participating, and floating-rate preferred.
American Depositary Receipt (ADR)
A dollar-denominated receipt for foreign shares, traded in the US.
Rights vs. Warrants
Rights: short-term, below market. Warrants: long-term, above market.
Restricted & Control Stock (Rule 144)
Unregistered or insider-held stock with resale limits.
Employee Stock Options (ISO vs. NSO)
Incentive options get capital gains treatment; nonqualified options create income at exercise.
Technical Analysis
Forecasting prices from charts, trends, and trading volume.
Fundamental Analysis
Valuing a company from its financial statements, management, and industry.
Dividend Discount Model
A stock is worth the present value of its future dividends.