SIE practice questionhardCommon Stock — Statutory Voting vs Cumulative Voting
An investor owns 100 shares of stock and there are 3 board seats up for election. Under cumulative voting, how many total votes does the investor have?
- A300✓ Correct answer
- B33
- C200
- D100
Explanation
Why A — 300
Under cumulative voting, the total votes equal shares owned multiplied by seats being elected: 100 shares x 3 seats = 300 votes. The investor can allocate all 300 votes to one candidate or spread them. Under statutory (regular) voting, the investor would cast 100 votes per seat but cannot aggregate them. Cumulative voting benefits minority shareholders.
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