What is the cumulative vote?

cumulative vote is a process that allows shareholders to hand over all the votes available to one candidate. This type of voting system is understood to provide minority shareholders a stronger voice and vote in matters that require the approval of most shareholders of the corporation. The idea is that the process of cumulative votes allows all shareholders to directly influence the outcome of the problem, such as the choice of persons to open seats on the board.

The cumulative vote is one of the two commonly used voting systems. The second system, known as a legal or regular vote, requires that individual shareholders not to use all their allocated votes to choose one candidate for an available chair on the board. Instead, the shareholder must use his assigned voices to vote for the elections to each considered open space. This means that the statutory vote in a situation where three open seats are on the board of directors would have to hand over the shareholderst its votes for one candidate for each of the seats. This is unlike a cumulative vote that would allow shareholders to submit all votes for one candidate to occupy one seat.

It is assumed that the cumulative vote process provides investors who control fewer votes in order to continue to influence the outcome of any vote. In the case of election of persons who will serve on the Board of Directors, a minority shareholder may decide to focus on one particular chair and submit all available votes for the candidate of his choice. If several minority shareholders decide to support the same candidate, there is an excellent chance that at least one of the new denominators will be popular with shareholders who have fewer shares.

Not all corporations decide to allow the cumulative voice to take place. The provisions contained within the tentOV and shares of shares usually specify how the shares associated with shares can be used in the voting situation. The review of these documents can help shareholders understand what type of voting system is used with the company.