What is Statutory Voting?

A corporate voting procedure where each shareholder gets to cast one vote per share for each candidate up for election is called Statutory Voting or Straight Voting. For e.g., if you owned 100 shares of a firm, and there were 4 candidates being polled for the position of Board Member, you would be able to cast 100 votes for each of the 4 candidates, taking your total voting tally to 400. You cannot however, cast 300 votes for one candidate and 100 for another, the votes are divided evenly amongst all the candidates as per Statutory Voting rules.

How Does Statutory Voting Work?

Unlike Cumulative Voting that allows shareholders to vote in favor of a candidate(s) of their choice while increasing the minority shareholders stakes in influencing the decision, Statutory Voting reduces the impact of shareholder voting by making for an even split in the number of votes cast. In the Cumulative Voting scenario, if you own a 100 shares of the firm and there are 4 candidates standing for election to the company Board, you can cast 400 votes for the candidate of your choice and none for the others. You can also choose to split your votes in any permutation or combination imaginable. For e.g., you can cast 25, 50, 75, and 250 votes for each of these candidates. Shareholders need to consult the Stockholder Agreement document to learn whether a corporate follows Cumulative Voting or Statutory Voting procedure.

Related Topics

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• Berle-Means Thesis 
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• Who are the members of a corporation?
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• Shareholder Democracy Definition
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• Straight and Cumulative Voting
• Statutory (Straight)
  
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• Chairman of the Board
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• Chief Investment Officer (CIO)
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