Majority Control

Posted in Finance, Accounting and Economics Terms, Total Reads: 1931
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Definition: Majority Control

‘Majority control’ or ‘majority interest’ or ‘controlling interest’ means possession of highest authority in the ownership of a firm. The person or firm with majority control is called the ‘majority shareholder’. This implies that no individual or coalition can oppose the motion of a majority shareholder. Usually this means having at least 50% plus one share of a company with publicly traded stock. But in case none of the other shareholders own significant amount of share, majority control may be achieved by owning a much less percentage of shares, e.g. at least 33% plus one share.

 

Importance:

  1. This helps in gaining absolute control over the company’s operations. However, some investors with majority control are not involved in the company’s daily operations.
  2. A by-product of this outright control is control over the election of board of directors, a highly crucial event for a firm, which otherwise requires a complete voting process.
  3. Though mostly 50% majority suffices for controlling the motion, in some cases, e.g. Delaware Corporation, a ⅔ super-majority is required for passing of an issue.

 

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