Editing Openai/68df4a3a-428c-8013-a459-5cff8e17edde (section)

===== 🔹 Polished Textbook-Like Version (just rephrased) =====

Shareholder Rights
Shareholders exercise control over a corporation primarily through the election of the Board of Directors, who oversee management on their behalf. Voting rights follow the principle of one share, one vote.

Two main systems of director election exist. Under cumulative voting, shareholders may concentrate their votes on fewer candidates, thereby increasing the probability of minority representation on the board. A shareholder owning more than 1/(N+1) of the shares, where N is the number of directors to be elected, is guaranteed at least one seat. By contrast, under straight voting, directors are elected individually, with votes cast separately for each seat. In this system, shareholders holding a simple majority can effectively secure all available seats, often excluding minority shareholders from board representation.

For example, in a corporation with 10,000 shares outstanding and three board positions open, an investor would require 2,501 shares to guarantee one seat under cumulative voting. This ensures that the remaining votes cannot be distributed in a way that eliminates their representation. Straight voting, however, offers no such protection, which is why certain jurisdictions mandate cumulative voting as a safeguard.

Corporations often mitigate the impact of cumulative voting through staggered elections, in which only a portion of the board is elected at one time. Staggering makes it more difficult for minority shareholders to secure representation, and it also deters hostile takeovers by limiting the ability to rapidly replace a majority of directors. Nevertheless, staggered terms can provide benefits by ensuring continuity, preserving institutional knowledge, and supporting long-term corporate strategy.

👉 Your version is good — with just a little polishing, it will read exactly like a textbook excerpt.

Do you want me to also show you a shorter version (like a "chapter-end summary box") that condenses it into bullet points for quick review?