Solution(By Examveda Team) Preference shareholders does not have voting rights. Most preference shares have a fixed dividend, while common stocks generally do not. Preferred stock shareholders also typically do not hold any voting rights, but common shareholders usually do.
Which stakeholders have voting rights?
Shareholders in a company are entitled to various rights with the virtue of the Companies Act, 2013. Section 47 of the act bestows voting rights to every shareholder of a company limited by shares. The voting right on a poll shall be in proportion to the share in the paid up equity share capital of the company.
Common shareholders are granted six rights: voting power, ownership, the right to transfer ownership, dividends, the right to inspect corporate documents, and the right to sue for wrongful acts.
Government notification dated June 5, 2015 allows a private company to issue its shares without voting rights subject to certain conditions. Apart from Tata Motors, Pantaloons Retail India (Future Retail group), Gujarat NRE Coke and Jain Irrigation are some of the prominent companies that have issued DVR shares.
Equity shares without voting rights. These shares are known as shares with Differential Voting rights related to voting power (either more voting rights or less voting rights). Some shall carry voting rights and others may not. The shares with lesser voting rights can carry higher divided rates and vice a versa.
All shares that are not preferential shares are equity shares and are also known as ordinary shares. A person who holds equity shares has the right to vote in the company’s decisions. As an equity shareholder, you are entitled to receive a claim to any profits paid by the company in the form of dividends.
Mergers. Mergers are transactions involving the combination of generally two or more companies into a single entity. The need for shareholder approval of a merger is governed by state law. Typically, a merger must be approved by the holders of a majority of the outstanding shares of the target company.
Rights of Shareholders
They have a right to call for an extraordinary general meeting if the shareholders holding more than 10 per cent of the paid-up capital of the company request for it to the board of directors. The meeting shall be called within 21 days of making such a request.
The differential rights are in respect of voting power and dividend.So generally equity shares with less voting rights carry higher rate of dividend but whereas the equity shares with higher voting shares carries with lesser rate of dividend.