Title: Cumulative voting for election of board members (part I)
Abstract:Corporate governance has created many new legal issues in recent decades among which cumulative voting stands out. Beside the fact that the European theory and practice still haven't made the final ju...Corporate governance has created many new legal issues in recent decades among which cumulative voting stands out. Beside the fact that the European theory and practice still haven't made the final judgment concerning this type of voting, the major incentive for writing this paper was legal availability of this type of shareholder voting according to the Serbian Law on Business Organizations and the Serbian Corporate Governance Code. Furthermore, cumulative voting is the presumed type of voting for the election of board of directors and supervisory board in open corporations. There is apparent need to clarify these provisions, as well as to offer necessary guidelines to companies in order to properly implement rules on cumulative voting. The introduction of this article covers meaning application and basic characteristics of straight voting, as a standard voting rule for shareholders. In the following parts of the article, the author explaines the basic characteristics of cumulative voting, and conditions for its application (legal availability and type of decisions). The author emphasizes the numerous problems in cumulative voting application which can lead to unjust and unexpected results. The following part of the article shows the most frequently used limitations of cumulative voting, such as reducing the size of the board, replacing cumulative voting with straight voting, deadlock situations, classifying the board, removing minority-elected directors without cause, and filling the vacancy on the board. The analysis of these factors is very important, because they undermine the effectiveness of cumulative voting. The last part of the article shows that arguments in favor and against cumulative voting are approximately equal, and therefore it is hard to give unequivocal conclusion in respect of justifying its introduction.Read More
Publication Year: 2008
Publication Date: 2008-01-01
Language: en
Type: article
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