Question

There are 500,000 shares outstanding and I own 5%. We are electing 5 members to the board. How many shares are required to elect 1 board member under (a) majority voting rules (b) cumulative rules?

Answer 1

Answer:

a) under majority rules:

Majority rule is a decision rule that selects alternatives which have a majority, that is, more than half the votes. It is the binary decision rule used most often in influential decision-making bodies including all the legislatures of democratic nations. Therefore,if i have to elect one memeber more than 50% votes are required from my end

b) under cumulative rules:

The Key points under cumulative voting rules are:

• Cumulative voting is used when electing a new director or board of directors.
• Each shareholder typically has one vote per share, multiplied by the number of directors to be elected.
• The shareholder can vote proportionally to the number of shares they hold.
• The shareholder can split the votes among multiple candidates or apply them to just one candidate.

Therefore here, since 5 memebers will be elected my total voting percentage would be 10% or even i can spilt my 10% vote among the candidates or I can simply vote to one candidate also.