In this tutorial, we will first explain shareholder rights and privileges, followed by common and preferred stocks and their respective properties. For example, they can vote on whether to allow a stock split, or whether the objective of the company should be changed. They cannot, however, vote on whether dividends should be distributed. A shareholder has one vote for each share owned. To cast their votes, most shareholders use a form of absentee ballot called a proxy.
Shareholders also elect the management of the corporation.
There are two methods of voting. The cumulative method allows those who do not own many shares to have as many votes as there are seats to be filled. Shareholders can cast all their votes for one candidate or distribute their votes among several. For example, if five directors were to be elected, an owner of 30 shares of stock with the cumulative voting right would have 150 votes that they could cast for one director or spread among the five directors. If the company offers a new issue of stock to the public, shareholders are accorded the right to buy new shares to keep their percentage of ownership the same.