CFA Level I · CFA Level I Exam · Equity Jurisdictions, Classes, and the Voting Process
A company has 3 director seats to be filled at its annual meeting. An investor holds 1,000 shares. Under cumulative voting, the maximum number of votes the investor can cast for a single candidate is closest to:
The investor can cast 3,000 votes for one candidate. Under cumulative voting, each share gets as many votes as there are seats, so 1,000 shares times 3 seats equals 3,000 votes, all of which may be concentrated on a single nominee.
- A1,000
- B3,000Correct
- C4,000
Explanation
Under cumulative voting each share carries one vote per open seat: 1,000 × 3 = 3,000 votes. These can all be placed on one candidate. 1,000 is the statutory voting result for one seat, and 4,000 wrongly adds an extra seat.
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