Voting right - Financial definition
Concise definition of the term voting right
The term voting right in finance refers to the privilege granted to shareholders allowing them to participate in corporate decision-making processes through voting on matters such as electing board members or approving corporate actions.
Comprehensive definition of the term voting right
A voting right entitles shareholders to cast votes on corporate matters, providing them with a voice in the governance of the company. Shareholders typically exercise these rights during annual general meetings (AGMs) or extraordinary general meetings (EGMs) to elect members of the board of directors, approve mergers and acquisitions, amend corporate bylaws, or decide on other significant corporate actions.
The number of votes a shareholder holds is generally proportional to their ownership stake in the company, with one share typically equating to one vote. While voting rights are fundamental to shareholder democracy, some structures, like dual-class shares, may disproportionately concentrate voting power in the hands of certain shareholders, potentially impacting corporate governance dynamics.