Which of the following is true of the issuance of nonvoting common stock?
A) It is issued in the event of a hostile takeover to preserve the interests of existing owners.
B) It helps the corporation to raise capital through the sale of common stock, without giving up its voting control.
C) It helps the existing stockholders to automatically transfer their voting rights to new stockholders without any legal proceeding.
D) It tends to result in the dilution of voting rights of current stockholders.

Question

Quizplus · Accepted Answer

Nonvoting common stock is issued by a corporation to raise capital through the sale of common stock, without giving up its voting control. This means that the shareholders holding nonvoting common stock do not have a say in the corporate decision-making process, but they are entitled to receive dividends and other distributions of profits. It is a way for the corporation to raise funds without diluting its voting control, which is important in cases where the corporation wants to retain control over its operations.

Which of the Following Is True of the Issuance of Nonvoting