Asynchronous Activity 3 โ Stocks
I. Essay
1. Statutory Voting, also known as Straight Voting, refers to โa corporate voting
procedure where each shareholder gets to cast one vote per share for each candidate
up for electionโ (Gordon, 2021). Furthermore, each director is voted on one at a time.
This means that a shareholder may give any one candidate, as a maximum, only several
votes equal to the number of shares they owned. Statutory voting favors majority
shareholders. On the other hand, in cumulative voting, the total number of votes each
shareholder may cast is equal to (# of shares owned) x (# of directors to be elected).
With cumulative voting, a shareholder may give all the votes he/she holds to a single
candidate. Cumulative voting favors minority shareholders (Finance Train, n.d.).
2. The common stock or also referred to as ordinary share refers to a stock whose
holder has the same right or privilege like other common shareholders mentioned in
the Corporation Code of the Philippines. A common stockholder has the following
rights: (1) right to vote, (2) right to amend the articles of incorporation, (3) right to adopt
and amend the by-laws, (4) right to be presented and vote by written proxy, (5) right to
elect and remove directors and trustees, (6) right to subscribe to additional new shares,
(7)right to receive dividends, (8) right to inspect the by-laws, records of business
transactions, and minutes of the meetings, (9) right to the financial statements, and (10)
right to be issued shares of stock.
On the other hand, preferred stock or also called as preference share, refers to
a share of stock that provides the holder some rights or privileges over the ordinary
shareholders. This does not mean, however, that the rights of ordinary shareholders are
curtailed. Rather, it only indicates that holders of preference shares are given priority
over the ordinary shareholders.
3. On the declaration date, the Board of Directors meet and declare the regular
dividend. For accounting purposes, the declared dividend becomes an actual liability
on the declaration date. If a balance sheet were prepared, an amount equal to P0.50 ร
number of shares issued outstanding, would appear as a current liability, and retained
earnings would be reduced by a like amount.
On the ex-dividend date, this refers to the two working days prior to date of
record. Shareholders buying stock on or after ex-dividend date will not receive
dividends.
At the close of business on the shareholder-of-record date, take for example,
December 10, the company closes its stock transfer books and makes up a list of
shareholders as of that date. If ABC Corporation is notified of the sale before 5 p.m. on
