The purpose of nonvoting common stock is to ________.
A) limit the voting power of the management
B) allow the minority interest to elect one director
C) raise capital without giving up any voting control
D) give preference on distribution of earnings to those shareholders who own the stock

Question

Quizplus · Accepted Answer

Nonvoting common stock is a type of stock that does not entitle the shareholder to vote on certain corporate matters, such as the election of directors or major corporate or policy changes. The purpose of nonvoting common stock is to raise capital without giving up any voting control, allowing the company's current management to maintain control over the corporation. This type of stock is often used by companies that wish to raise funds without diluting their voting power or risking a takeover.

The Purpose of Nonvoting Common Stock Is to ________