Do Shareholders Have to Approve the Sale of a Company?
The ownership of stock allows individuals to obtain a right of ownership within a company in which he owns stock. By providing the corporation with money to invest by purchasing stock, the shareholder obtains a certain amount of rights within the corporation. These rights may include receiving dividends or having voting privileges when deciding important aspects involving the company. The more stock a person owns, the more dividends or voting power he has.
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Determination of Rights
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Each specific state determines the rights of shareholders within a company. While many states follow the same outline of power between the two types of shareholders, some states will have separate rules and divisions of power. All states, however, have two types of stock options when it comes to corporations.
Shareholder Types
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These options are preferred or common stock. When purchasing stock, an individual has the right to purchase either type, depending on which the company offers. The type of stock he purchases determines shareholders rights.
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Rights of Preferred Shareholders
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Preferred shareholders receive dividends of the company's profit. These stockholders do not have voting privileges when it comes to the future of the company, such as selling it to another corporation or liquidating it. If you own preferred stock, it is likely you cannot vote when a corporation is attempting to sell the company.
Rights of Common Shareholders
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Common shareholders receive voting privileges and may receive dividends from profit. These shareholders receive voting privileges in company elections and during important changes. These changes may include merging the company with another, selling the company for liquidation or the accusation of a company by another corporation. Once shareholders vote and come to a decision concerning a corporation, a common shareholder can sell his stock if he disagrees. This will forfeit all of his rights, dividends and voting privileges within the company.
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References
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