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 rights.
D) give preference on distribution of earnings to those shareholders who own the stock.

Question

Quizplus · Accepted Answer

The purpose of nonvoting common stock is to raise capital without giving up any voting rights. This allows the company to maintain control over the decision-making process while still raising funds from investors. This is beneficial for the company as it allows them to keep a stronger hold on the company's direction and strategy, while still being able to raise funds for growth and expansion.

The Purpose of Nonvoting Common Stock Is to