Who possesses voting rights in a company?

Who possesses voting rights in a company?

• A. Common stockholders
• B. Preferred stockholders
• C. Both common and preferred stockholders
• D. None of the stockholders

Answer: (A)

Common stockholders possess voting rights in a company. This is a fundamental characteristic of common stock; it grants shareholders the ability to vote on key corporate matters, including the election of the board of directors and other significant corporate policies. These voting rights are typically exercised during annual shareholder meetings, where stockholders can influence the direction of the company. Preferred stockholders, on the other hand, generally do not have voting rights. Their investment typically prioritizes dividends and liquidation preferences over voting power. While they might benefit financially in certain situations, such as through fixed dividends, they lack the ability to directly participate in governance decisions. Therefore, the correct answer reflects the distinguishing feature of common stockholders, who play an active role in the ownership and governance of the corporation through their rights to vote.

Common stockholders possess voting rights in a company. This is a fundamental characteristic of common stock; it grants shareholders the ability to vote on key corporate matters, including the election of the board of directors and other significant corporate policies. These voting rights are typically exercised during annual shareholder meetings, where stockholders can influence the direction of the company.

Preferred stockholders, on the other hand, generally do not have voting rights. Their investment typically prioritizes dividends and liquidation preferences over voting power. While they might benefit financially in certain situations, such as through fixed dividends, they lack the ability to directly participate in governance decisions.

Therefore, the correct answer reflects the distinguishing feature of common stockholders, who play an active role in the ownership and governance of the corporation through their rights to vote.