Table of Contents

Statutory Voting: What It Is, How It Works

By

澳洲幸运5官方开奖结果体彩网:Marshall Hargrave

Updated October 02, 2024

Reviewed by

Thomas J. Catalano

Fact checked by

Vikki Velasquez

Shareholders voting in a business meeting — g-stockstudio / Getty Images

Definition

Statutory voting is a corporate voting system where each shareholder has one vote per share in elections of the Board of Directors or to vote on important matters.

What Is Statutory Voting?

Statutory voting is a corporate voting procedure used by companies to elect candidates for a board of directors and decide on 🃏important company issues.

Under the statutory voting system, each shareholder is entitled to one vote per share, per candidate. Furthermore, vote🦹s must be divided evenly among 🌠the candidates.

Statutory voting🔜, sometimes known as straight voting, is one of two stockholder voting procedures and the more common option. The other is cumulative voting.

Statutory voting, also known as straight or regular voting, is a common method used by shareholders to vote for company directors and company issues.
Statutory voting means that shareholders have one vote per share, per election candidate.
Votes must be evenly divided among the directors up for election.
The other shareholder voting procedure is cumulative voting, which allows the total number of votes to be allocated based on a shareholder's preference.
Cumulative voting improves a minority shareholder's chance of influencing a vote.

How Statutory Voting Works

Statutory voting requires that the votes of a shareholder be divided evenly among the candidates or issues being voted on and that each share carries one vote.

Additionally, shareholders can cast the maximum number of votes for each candidate. Therefore, if you owned 50 shares and were voting on six board of director positions, you could cast 50 vote🌞s for each board member. That's a total of 300 votes.

You could not cast 20 votes for each of five board members and 200 for the sixth. That's because you cannot allocate to any one candidate more than the number of shares/votes you have, which in this case, is 50. Plus, in statutory voting, votes must be evenly divided.

Important

Statutory and cumulative voting are the two procedures used by 澳洲幸运5官方开奖结果体彩网:shareholders to vote on issues or board members, with sta𓆉tutory being the more common of the two.

Statutory Voting vs. Cumulative Voting

The other, but less commonly used, corporate voting method is cumulative voting. Cumulative voting lets shareholders allocate their votes in the manner they choose for particular candidates. As a result, it improves minority shareholders' chances of influencing voting outcomes.

Cumulative voting allows for disproportionate voting. For example, if you own 50 shares and are voting on six board candidates, you can cast 300 votes (50 votes multiplied by six candidates) for one director and none for the fiv♔e other directors. Or you might cast 20 votes for each of five board candidates and 200 for the sixth. The shareholder gets to choose how to allocate their votes.

Why Is Statutory Voting the More Commonly Used Method?

Sinc🎶e cumulative voting gives minority shareholders greater ability to elect directors that they prefer, it may be that companies hope to keep the power to influence elections out of the hands of shareholders through statutory voting.

Doesn't Statutory Voting Give Me More Than One Vote Per Share?

No, it restricts you to a single vote per share. However, it allows you to vote each share for each of the various candidates up for election to the board of directors. So if you own 100 shares, you are entitled to ca൩st one vote for each of the shares (rather than, for exam𒆙ple, two) and you can apply them evenly to each candidate for director. If there are four candidates, each could receive 100 votes from you.

How Do I Know Which Voting Method a Company Uses?

You can find out which corporate voting method is used by companies in which you own shares by reading the shareholders' agreement or the proxy materials you receive from them, in which they'll usually define how to vote. You can also contact a board of director's Corporate Secretary for more information. Investor Relations may also be able to help.

The Bottom Line

Statutory voting is one of two corporate voting processes used to elect board of director candidates and enact import𝓰ant corporate measures. The other method is cumulative voting.

Statutory voting involves one vote per share per candidate, and votes for all candidates must be evenly divided. To find out whether a company uses statutory voting or cumulative voting, consult its 澳洲幸运5官方开奖结果体彩网:shareholders’ agreement or contact the Investor Relations department.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

Mills, Lewis R. "," Duke Law Journal, vol. 1968, no. 28, February 1968🌠, pp. 2𓂃8, footnote.

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