B L O G
Legal Guides for consumers
Common shareholders in a publicly traded company have certain rights pertaining to their equity investment. One of the most important of these is the right to vote on certain corporate matters.
What can shareholders vote on?
Shareholders have no right to vote on basic management issues. A corporation’s officers and board of directors manage its day-to-day operation. However, shareholders are able to exert their ownership by voting on key corporate issues. In a large, publicly held corporation, shareholders exert their greatest influence through elections of the corporation’s directors. Shareholders also have the right to vote on proposed corporate changes such as a shift in the corporation’s goals or fundamental structural changes. Additionally, shareholders also have the right to vote on matters that directly affect their ownership, including the corporation’s decision to do a stock split or a proposed merger or acquisition. Finally, shareholders may also have the right to vote on executive compensation packages and other administrative issues.
How do shareholders know when to vote?
Publicly traded companies are required to set what is known as a “record date.” Investors who own the company*s shares on that record date have the right to vote. A shareholder who owns shares of the on the record date will receive one of the following three communications from the company: (1) a notice that proxy materials are available on the Internet; (2) a package containing a proxy card or voting instruction form, annual report, and proxy statement; or (3) a package containing an annual report and information statement, but no proxy card.
How does a shareholder vote at a corporate election?
State law authorizes shareholders to vote at an annual or special meeting. However, since most shareholders are dispersed across the country (or world) far away from these meetings, the law permits shareholders to vote by “proxy” without being present in person. This is how most shareholders vote. In corporate elections, when you vote by proxy, you are authorizing someone, often members of the company’s management, to vote according to your wishes as reflected on the proxy card at the meeting.
Timothy L. Miles
Timothy L. Miles is a nationally recognized shareholder rights attorney raised in Nashville, Tennessee. Mr. Miles was recentely selected by Martindale-Hubbell® and ALM as a 2022 Top Ranked Lawyer, 2022 Top Rated Litigator. and a 2022 Elite Lawyer of the South. Mr. Miles also maintains the AV Preeminent Rating by Martindale-Hubbell®, their highest rating for both legal ability and ethics. Mr. Miles is a member of the prestigious Top 100 Civil Plaintiff Trial Lawyers: The National Trial Lawyers Association, a superb rated attorney by Avvo, a recipient of the Lifetime Achievement Award by Premier Lawyers of America (2019) and recognized as a Distinguished Lawyer, Recognizing Excellence in Securities Law, by Lawyers of Distinction (2019).
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