Voting interest (or voting power) in
business
Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...
and
accounting
Accounting, also known as accountancy, is the process of recording and processing information about economic entity, economic entities, such as businesses and corporations. Accounting measures the results of an organization's economic activit ...
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 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. (), also known as MOL Group, is a Hungarian Multinational corporation, multinational petroleum, oil and natural gas, gas company headquartered in Budapest, Hungary. Members of MOL Group include among others the Croatian and Slovak former ...
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 acti ...
).
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
Graham Holdings Company (formerly The Washington Post Company) is a diversified American conglomerate holding company. Headquartered in Arlington County, Virginia, and incorporated in Delaware, it was formerly the owner of ''The Washington Po ...
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. (also known simply as Dow Jones) 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'' ...
, publisher of ''The Wall Street Journal'', had a similar structure and was controlled by the Bancroft family but was later bought by
News Corporation
The original incarnation of News Corporation (abbreviated News Corp. and also variously known as News Corporation Limited) was an American Multinational corporation, multinational mass media corporation founded and controlled by media mogul Ru ...
in 2007, which itself is controlled by
Rupert Murdoch
Keith Rupert Murdoch ( ; born 11 March 1931) is an Australian - American retired business magnate, investor, and media mogul. Through his company News Corp, he is the owner of hundreds of List of assets owned by News Corp, local, national, a ...
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
Shares outstanding are all the shares of a corporation that have been authorized, issued and purchased by investors and are held by them. They are distinguished from treasury shares, which are shares held by the corporation itself, thus representi ...
.
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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