Which of the following is correct concerning the election of directors?
A)Straight voting is the cleanest way to allocate equity ownership of the corporation among shareholders.
B)In cumulative voting,each share has one vote for each new director to be elected.
C)Cumulative voting can prevent harmful coalitions in close corporations.
D)Under straight voting,the voting power of minority shareholders is increased.

Question

Quizplus · Accepted Answer

Using classes of shares is the cleanest way to allocate equity ownership of the corporation among shareholders.In straight voting,each share has one vote for each new director to be elected.Under straight voting,the nominees with the most votes are elected.Consequently,straight voting allows a majority shareholder to elect the entire board of directors.Thus,minority shareholders are unable to elect any representatives to the board without the cooperation of the majority shareholder.One alternative to straight voting in aiding minority shareholders' attempts to gain representation on the board and prevent harmful coalitions in close corporations is cumulative voting.

Which of the Following Is Correct Concerning the Election of Directors