What Is Corporate Voting Rights?

Understanding Voting Rights in Corporate Governance

The concept of voting rights explained

In corporate governance, the concept of voting rights is based on shareholders’ or members’ ability to influence key company decisions through voting. This means that the owner of company shares or equity receives shareholder voting rights, allowing them to vote at general meetings or other corporate governance events. With such rights, shareholders can participate in deciding on key company matters, including deciding who will be on the board of directors, approving amendments to the charter, company policies, and more.

In many jurisdictions, each share gives one vote (“one-share-one-vote” system), although exceptions exist.

Why voting rights are fundamental to shareholder democracy

The right to vote of shareholders is one of the basic elements of shareholder democracy. It is a system where company owners control and influence how the business is managed.

Without such rights, shareholders risk becoming only passive investors with no say in how board members are elected, who becomes an executive, or how strategies are approved.

Voting rights ensure a balance of power between capital owners and company management, preventing abuse and promoting more effective governance.

How voting power is determined

Usually, votes on the management of a company are proportional to the number of shares owned: the more shares — the more votes. However, in some cases, companies may issue non-voting shares, limited-voting shares, or a class of shares with double voting rights (for example, super-voting shares).

Who Has Voting Rights in a Company

Shareholders as primary voting members

Shareholders holding voting shares are the primary voting members. They vote at general meetings on strategic matters such as charter changes, board elections, and mergers. Thus, the answer to the question of who has voting rights in a company is primarily the owners of shares that have voting rights according to the charter or law.

Board of directors and management votes

Certain company decisions are made through the board of directors’ voting rights. The board votes at its meetings on internal management issues, for example, appointing executives, approving policies, or financial reports. Therefore, there is a clear distinction: shareholders decide on general directions, while the board manages operational details.

Importantly, management does not have direct voting rights in shareholder meetings unless they are also shareholders or hold voting shares.

Voting rights in private vs public companies

In public companies, voting is more strictly regulated by law, stock exchange rules, and reporting obligations. For example, shareholders have the right to vote but may be subject to certain procedures (through brokers or proxy representatives).

In private companies, shareholder voting rights are often defined by special charter provisions or shareholder agreements. In such cases, founders may hold concentrated voting rights, while smaller shareholders may have limited participation.

How Shareholder Voting Work?

How does shareholder voting work?

To understand how does shareholder voting work, we should look at the process:

1) Shareholders receive a notice of the general meeting (annual or special)

2) Register, and obtain the right to vote

3) After that, they can vote in person, by proxy, or electronically

Voting may concern ordinary or special issues such as board elections, charter changes, or the approval of major transactions. The result is counted according to the procedure approved by the charter or the law.

One-share-one-vote principle and exceptions

The typical model is “one share = one vote.” However, sometimes companies may issue classes of shares with limited or no voting rights, or shares with superior rights, when one share gives more than one vote. This means that not all shares necessarily have the same voting power and this affects the balance of control among shareholders.

Proxy voting and electronic ballots

Many companies allow proxy voting, where a shareholder delegates their voting right to another person or organization to vote on their behalf. Nowadays, there is electronic or remote voting through online systems, which makes participation easier for shareholders in large public companies. It helps ensure participation even for small shareholders and increases voting efficiency, but it also requires transparency and safeguards against misuse.

What Do Shareholders Vote On?

Election of the board of directors

One of the key issues that shareholders vote on at annual or special meetings is the election of the board of directors. This process allows shareholders to influence who controls management, shaping company leadership.

Approval of mergers, acquisitions, and major policies

Shareholders also vote on important strategic steps such as mergers, acquisitions, major investments, dividend policies, or new shares issuance. This gives company owners a say in major decisions that may affect company structure or profitability.

Amendments to corporate charters and bylaws

Another category involves changes to the company’s constitutional documents (charter, bylaws). Shareholders can vote for or against amendments that modify such internal company rules as shareholder rights, voting rights, share classes, board quotas, etc.

And that is generally what do shareholders vote on.

Board of Directors Voting Rights

Internal board voting procedures

Once elected, the board uses internal voting procedures to make decisions – this is what board of directors voting rights mean in a narrow sense. Such actions may include appointing the CEO, approving the budget, or setting company policies.

Majority vs unanimous decisions

Within the board, different thresholds for decisions may apply. Some issues are decided by a simple majority, others must be approved unanimously or by a qualified majority. This depends on the importance of the matter or on the provisions of the company's charter. For example, radical strategic changes or management restructuring may require unanimity or qualified voting.

Difference between board and shareholder votes

Shareholders vote on global strategic matters, while the board handles operational ones. In short, shareholders set direction and elect the board, and the board manages execution.

Voting Rights in Private Companies

How private shareholder voting differs from public firms

In private companies, voting mechanisms may be less formal and more dependent on shareholder agreements or founders’ agreements. They may include provisions that limit shareholder voting rights in private company – for example, creating special share classes, blocking certain votes, or requiring a quorum among founders.

Such companies may also hold general meetings less frequently or use different procedures compared to public companies, and participation by smaller shareholders may be limited.

Voting agreements and founder control

Private firms often use shareholder agreements that determine who and how they vote, and may give founders special privileges, for example, through super-voting shares or control provisions in shareholder agreements. This allows founders to retain control even when they hold a minority economic stake.

Minority shareholder protection

However, it is important to pay attention to the protection of minority shareholders’ rights. In private companies, minorities have limited control. That is why voting conditions and shareholder agreements should include protective mechanisms such as veto rights or the requirement of a qualified majority for key changes.

FAQ on Company Voting Rights

Who can vote in a company?

Shareholders who are granted the right to vote by law and the company’s charter can vote.

What do shareholders vote on?

Shareholders vote on general strategic issues such as the election of the board of directors, approval of strategic transactions, and amendments to the company’s charter or bylaws.

How are board members elected?

Board members are elected by shareholders at general or special meetings.

Can minority shareholders vote?

Yes – minority shareholders have the right to vote if they hold voting shares.

How do voting rights affect company control?

Voting rights directly affect company leadership and control. Shareholders with a majority of votes can control key areas of the company and determine development path — meaning that shareholder voting rights are one of the main mechanisms of company control. If the voting structure is unequal, it can shift the balance of power within the company.