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CFA Level I · CFA Level I Exam · Equity Jurisdictions, Classes, and the Voting Process

Compared with statutory voting, cumulative voting is most likely to:

Cumulative voting most likely helps minority shareholders gain board representation. They can pool all their votes on one or few candidates and so elect a director. Under statutory voting, a majority holder can win every seat, which is why cumulative voting is more favorable to minorities.

  1. Arequire unanimous approval of all directors
  2. Bhelp minority shareholders gain board representationCorrect
  3. Cgive controlling shareholders more power to elect every director

Explanation

Cumulative voting lets shareholders concentrate their votes on one or a few candidates, so a minority block can elect a director. Statutory voting gives the majority holder the ability to win every seat, so the third option describes statutory voting, not cumulative voting.

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