Statutory voting là gì

Cumulative voting là Bầu dồn phiếu. Đây là nghĩa tiếng Việt của thuật ngữ Cumulative voting - một thuật ngữ được sử dụng trong lĩnh vực kinh doanh.

Xem thêm: Thuật ngữ kinh doanh A-Z

Giải thích ý nghĩa

Hệ thống biểu quyết (không giống như bầu cử định kỳ hoặc theo luật định) cho phép cổ đông thiểu số (cổ đông) một cơ hội để đặt tên cho một hoặc nhiều giám đốc để ban lãnh đạo công ty. Trong bầu dồn phiếu, mỗi cổ phần có nhiều phiếu như có vị trí trống trên bảng, và từng cổ đông có thể phân bổ cổ phần như anh ta hoặc cô ta muốn, hoặc có thể bỏ tất cả các phiếu bầu cho bất kỳ một trong những ứng cử viên.

Definition - What does Cumulative voting mean

System of voting which (unlike regular or statutory voting) allows minority stockholder (shareholders) a chance to name one or more directors to the firm's board. In cumulative voting, each share has as many votes as there are vacant positions on the board, and each shareholder can apportion the shares as he or she wishes, or can cast all votes for any one of the candidates.

Source: Cumulative voting là gì? Business Dictionary

Straight voting, commonly known as statutory voting, is a corporate voting system that may be used to elect directorsBoard of DirectorsA board of directors is a panel of people elected to represent shareholders. Every public company is required to install a board of directors. or to vote on important matters (e.g., voting on auditors, mergers and acquisitions opportunities, etc.). In the context of electing a director, each share is usually entitled to one vote per director seat.

For example, if a shareholder owned 100 shares and three directors were up for election, the shareholder can cast up to 100 votes per director for a total of 300 votes. Note that each director can only be voted up to 100 – the shareholder cannot allocate more than the number of shares owned to each board member.

Example of Straight Voting

John is a shareholder in ABC Company. At the company’s annual general meeting (AGM), five directors are up for election. John owns 1,000 shares in ABC Company and each share entitles John to one vote. Under straight voting, John can vote 1,000 times for each of the five directors for a total of 5,000 votes.

Here is a possible scenario in which John can vote his shares in straight voting:

• 1,000 votes for Director 1
• 500 votes for Director 2
• 300 votes for Director 3
• 100 votes for Director 4
• 50 votes for Director 5

Here is a possible scenario that would not be allowed for John in straight voting:

• 1,500 votes for Director 1  (not allowed)
• 1,050 votes for Director 2  (not allowed)
• 300 votes for Director 3
• 100 votes for Director 4
• 50 votes for Director 5

Under straight voting, since John only owns 1,000 shares, the maximum he can vote for each director is 1,000 votes.

Disadvantage of Straight Voting

There is an inherent problem with straight voting: minority shareholder representation. That is, a majority shareholder with 100 shares will have a greater influence over who is elected than a minority shareholder with 50 shares, as the majority shareholder is able to vote up to 100 times per nominee, while the minority shareholder is only able to vote up to 50 times per nominee.

Due to the votes being allocated proportionally to each director up for election, the majority shareholder will always be able to outvote a minority shareholder. Therefore, under straight voting, minority shareholders have a lower chance of influencing who gets elected to the board. To address this problem, cumulative voting can be used as an alternative to straight voting.

Straight Voting vs. Cumulative Voting

The key difference between straight voting and cumulative voting lies in the fact that in cumulative voting, the shareholder can cast the total number of his votes for any candidate or in whatever proportion he or she desires. Therefore, cumulative voting as an alternative to straight voting allows more minority shareholder representation. With that being said, cumulative voting is seldom used by the majority of S&P 500 companies.

Example of Cumulative Voting

To effectively contrast cumulative voting to straight voting, assume the same fact pattern in the previous example of straight voting. For convenience, the example scenario is repeated below:

John is a shareholder in ABC Company. At the AGM, five directors are up for election. John owns 1,000 shares in ABC Company, and each share entitles John to one vote. Under cumulative voting, John can vote the total of 5,000 votes for any director he likes.

Here is a possible scenario in which John can vote his shares in cumulative voting:

• 1,500 votes for Director 1
• 1,050 votes for Director 2
• 300 votes for Director 3
• 100 votes for Director 4
• 50 votes for Director 5

Recall that in the straight voting example, the scenario above was not possible because straight voting only allowed John up to 1,000 votes per director. With cumulative voting, John can vote the total of his votes (5,000) however he likes.

Related Readings

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To keep learning and developing your knowledge of financial analysis, we highly recommend the additional CFI resources below:

• Minority InterestMinority InterestMinority interest refers to having a stake in a company that is less than 50% of the total shares in terms of voting rights.
• Preferred SharesPreferred SharesPreferred shares (preferred stock, preference shares) are the class of stock ownership in a corporation that has a priority claim on the company’s assets over common stock shares. The shares are more senior than common stock but are more junior relative to debt, such as bonds.
• Proxy VoteProxy VoteA Proxy Vote is a delegation of voting authority to a representative on behalf of the original vote-holder. The party who receives the authority to vote is known as the Proxy and the original vote-holder is known as the Principal. The concept is important in financial markets and particularly with public companies
• Stockholders EquityStockholders EquityStockholders Equity (also known as Shareholders Equity) is an account on a company's balance sheet that consists of share capital plus

Statutory voting is a corporate voting procedure in which each shareholder is entitled to one vote per share and votes must be divided evenly among the candidates or issues being voted on. Statutory voting, sometimes known as straight voting, is one of two stockholder voting procedures and the more common option.

Statutory and cumulative voting are the two procedures for allowing shareholders to vote on issues or board members, with statutory being the more common of the two.

In statutory voting, if you owned 50 shares and were voting on six board of director positions, you could cast 50 votes for each board member, for a total of 300 votes. You could not cast 20 votes for each of five board members and 200 for the sixth.

Statutory voting is a voting system that requires that the votes are divided evenly among the candidates or issues being voted on and each share earns one vote. There are other ways of voting.

The other voting procedure is cumulative voting, which lets shareholders weight their votes toward particular candidates and improves minority shareholders' chances of influencing voting outcomes. In cumulative voting, you are allowed to vote disproportionately. If you own 50 shares and are voting on six board positions, you can cast 300 votes for one director and none for the five other directors, 20 votes for each of five board members and 200 for the sixth, or any number of other combinations.

To find out whether a company uses statutory voting or cumulative voting, consult its shareholders’ agreement.

• Statutory voting, also known as straight voting, means that shareholders have one vote per share and that votes must be evenly divided among issues.
• The other shareholder voting procedure is cumulative voting, which allows votes to be weighted based on the shareholder's preference.
• Cumulative voting improves a minority shareholder's chance of influencing a vote.