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When a company wants to raise capital through the sale of common stock but still maintain control, it can issue nonvoting stock or supervoting stock.
1. Nonvoting stock: This type of stock does not give shareholders the right to vote on certain company matters, such as electing the board of directors. By issuing nonvoting stock, the company can raise capital without diluting its control as shareholders do not have voting rights.
2. Supervoting stock: On the other hand, supervoting stock gives certain shareholders more voting power than others. This means that even though the company is raising capital by issuing additional shares, those shares come with higher voting rights for specific shareholders, allowing them to retain control over important decisions.
Both nonvoting and supervoting stock options enable a company to raise funds through common stock without surrendering control of the business.
