Legal Definitions - nonvoting stock

Nonvoting stock is a type of stock that does not give the shareholder the right to vote on corporate matters. It is a class of stock that entitles the holder to receive dividends after other claims and dividends have been paid, and to share in assets upon liquidation. Nonvoting stock is often issued by companies to raise capital without diluting the voting power of existing shareholders.

For example, if a company has 100 shares of voting stock and wants to raise more capital, it can issue 100 shares of nonvoting stock. This way, the company can raise more money without giving up any voting power to new shareholders.

Another example is if a company wants to reward its employees with stock options, it may issue nonvoting stock options to avoid diluting the voting power of existing shareholders.

Nonvoting stock is a way for companies to raise capital or reward employees without giving up voting power. However, it also means that nonvoting shareholders have no say in the company's decisions.