Voting interest (or voting power) in business and
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "language ...
means the total number, or percent, of votes entitled to be cast on the issue at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event which has not occurred at the time.
Voting interest is one form of economic interest. Economic interests comprise all types and forms of investment vehicles that an investee could issue or be a party to, including equity securities; financial instruments with characteristics of equity, liabilities, or both; long-term debt and other debt-financing arrangements; leases; and contractual arrangements such as management contracts, service contracts, or intellectual property licenses.
Non-voting interest
Ownership of more than 50% of voting shares generally gives the right of
control
Control may refer to:
Basic meanings Economics and business
* Control (management), an element of management
* Control, an element of management accounting
* Comptroller (or controller), a senior financial officer in an organization
* Controlli ...
and
consolidation. In special cases, control is possible without having to own more than 50% of voting stock. For example, if agreed, shareholders may pass control to a chosen one owning much fewer shares (for example in the case of the two petroleum companies,
MOL Group
MOL Plc. ( hu, Magyar OLaj- és Gázipari Részvénytársaság, lit=Hungarian Oil and Gas Public Limited Company), also commonly known as MOL Group, is a Hungarian multinational oil and gas company headquartered in Budapest, Hungary. Members of ...
and
INA - Industrija nafte
INA-Industrija nafte, d.d. is a Croatian multinational oil company. INA Group has leading role in Croatia's oil business, a strong regional position in the oil and gas exploration and production, oil processing, and oil product distribution activ ...
).
In other cases, companies divide their stock into voting and non-voting classes, which can allow a small minority of shareholders to control a majority of the voting shares. This technique is often used to allow a company's founders to cash out much of their ownership without giving up control.
In the American media, dual-class structures caught on in the mid-20th century as families such as the Grahams of
The Washington Post Company and the Ochs-Sulzbergers of ''The New York Times'' sought to gain access to public capital without losing control.
Dow Jones & Company
Dow Jones & Company, Inc. is an American publishing firm owned by News Corp and led by CEO Almar Latour.
The company publishes ''The Wall Street Journal'', '' Barron's'', ''MarketWatch'', ''Mansion Global'', ''Financial News'' and ''Private E ...
, publisher of ''The Wall Street Journal'', had a similar structure and was controlled by the Bancroft family but was later bought by
News Corporation in 2007, which itself is controlled by
Rupert Murdoch and
his family
''His Family'' is a novel by Ernest Poole published in 1917 about the life of a New York widower and his three daughters in the 1910s. It received the first Pulitzer Prize for the Novel in 1918.
Plot introduction
''His Family'' tells the story ...
through a similar dual-class structure.
Example
Company ABC issues 1,000,000 ordinary shares and 500,000 preferred
shares outstanding.
Company XYZ buys 700,000 voting shares and 100,000 preferred ones.
Therefore, XYZ's voting interest is (700,000/1,000,000) = 70%, and its economic interest is (800,000/1,500,000) = 53%
References
External links
Common Stock vs. Preferred Stock
Corporate finance
Equity securities
Stock market
Mergers and acquisitions
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