Difference between revisions of "Minority stake"

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Owners or investors hold a minority stake in a corporation if they own a block of [[shares]] that make up less than half its total stock. Depending on the size of that block and governing laws, minority stakeholders can nonetheless exercise some influence over [[board]] decision-making.
 
== Blocking scheme ==
 
As well as buying a large number of its shares, stakeholders can also find themselves with a minority interest in Company A if they own a [[controlling stake]] in Company B that Co. A then acquires. This minority interest must then be accounted for separately from Co. A's regular [[financial statement]]s since the two are considered a single entity under U.S. accountancy practices.<ref>{{cite web|url=http://www.investorglossary.com/minority-interest.htm|name=Minority Interest|org=Investor Glossary|date=September 4, 2008}}</ref>
 
Depending on legal jurisdiction and company rules, minority shareholders that hold more than a certain percentage of a U.S. corporation's stock - usually one quarter or one third of the total stock - hold veto power over board decisions at extraordinary general meetings.<ref>{{cite web|url=http://www.vernimmen.com/html/glossary/definition_blocking_minority.html|name=Definition of Blocking Minority|org=Vernimmen.com|date=September 3, 2008}}</ref> Such a stake is referred to as a 'blocking minority'. In other cases, minority shareholders can register their dissent - under certain conditions - from board decisions to protect their investment by gaining the fair value of their stake plus interest.<ref>{{cite web|url=http://ezinearticles.com/?Minority-Share-Interests---The-Good,-the-Bad-and-the-Ugly&id=863031|name=Minority Share Interests - The Good, the Bad and the Ugly|org=Acquisition Advisors|date=September 3, 2008}}</ref> 
 
== References ==
<references />
 
[[Category:Stocks]]
[[Category:Equities]]

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