Also known as: majority of shares voting · majority vote
Written by attorneys · grounded in primary & secondary sources — see below
A voting threshold for shareholder action under which only shares actually cast for or against a proposal are counted. Abstentions are disregarded rather than treated as votes against the measure.
Pinnacle shareholders vote on whether to approve a board committee recommendation to dismiss a derivative claim against Teresa. Of the shares present, 40 percent vote yes, 30 percent vote no, and 30 percent abstain. Because only the shares actually voting are counted, the yes votes constitute a majority of the shares voting and the recommendation is adopted.
Harvest Grove shareholders meet to decide whether to buy a tractor with corporate funds. Maria and others representing 55 percent of the shares vote yes, 25 percent vote no, and 20 percent abstain. The yes votes form a majority of the shares voting, so the purchase is authorized.
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Pinnacle shareholders vote on a committee recommendation to dismiss Frances's derivative claims. Of the shares present, one-third vote yes, one-third vote no, and one-third abstain. The yes votes constitute a majority of the shares voting, allowing the corporation to move for dismissal.
Paramount shareholders consider the QVC merger proposal. Forty-five percent of shares vote in favor, 35 percent vote against, and 20 percent abstain. The affirmative votes constitute a majority of the shares voting, satisfying the required threshold for approval.
UOP shareholders vote on the cash-out merger with Signal. A bare majority of shares actually cast vote yes while many shares abstain. The yes votes satisfy the majority-of-shares-voting standard, defeating the fairness challenge based on vote count alone.
CA shareholders consider an AFSCME-proposed bylaw requiring reimbursement of proxy expenses. Fifty-two percent of shares cast yes votes, 30 percent vote no, and the rest abstain. The yes votes form a majority of the shares voting and the bylaw passes.
Abstentions are ignored entirely. Only shares actually cast for or against the proposal are counted, so a measure can pass even if it receives support from far less than a majority of all shares entitled to vote.
Supporting sources
The rule eliminates the effect of abstentions as negative votes. It allows shareholder action when a clear majority of those who choose to participate support the proposal, reducing the risk that low turnout defeats otherwise approved measures.
Supporting sources
Yes. Corporation statutes commonly permit the articles to require a greater vote for shareholder action, including supermajority standards that override the default majority-of-shares-voting rule.
Supporting sources
…than a void, act. Hence, the merger can be sustained, notwithstanding the infirmity of the Board's action, if its approval by majority vote of the shareholders is found to have been based on an informed electorate. Cf. Michelson v. Duncan , Del.Supr., 407 A.2d 211 (1979), aff'g in part and rev'g in part , Del.Ch., 386 A.2d…