Voting interest in business and accounting means the total number of votes entitled to be cast on the issue at the time the determination of voting power is made, excluding a vote which is contingent upon the happening of a condition or event which has not occurred at the time.

This notion is different from economic interest that refers to a percentage of all the equity

Ownership equity

In accounting and finance, equity is the residual claim or interest of the most junior class of investors in assets, after all liabilities are paid. If liability exceeds assets, negative equity exists...

 issued, including preferred stock

Preferred stock

Preferred stock, also called preferred shares, preference shares, or simply preferreds, is a special equity security that has properties of both an equity and a debt instrument and is generally considered a hybrid instrument...

, warrants

Warrant (finance)

In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date....

, and so on. Ownership of more than 50% of voting shares gives the right of control and consolidation

Consolidation (business)

Consolidation or amalgamation is the act of merging many things into one. In business, it often refers to the mergers and acquisitions of many smaller companies into much larger ones. In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group...

. In special cases, control is possible without having to own more than 50% of voting stock. For example, if agreed, shareholders may pass control to a chosen one owning much fewer shares (for example in the case of the two petroleum companies, MOL Group and INA - Industrija nafte

INA - Industrija nafte

INA - Industrija nafte, or INA for short, is the national oil company of Croatia. It was founded in 1964. The company is owned by the Hungarian oil company MOL Group , the Republic of Croatia and private investors . Its stock is listed at the Zagreb Stock Exchange and through GDRs at the London...

).

Example

Company ABC has 1,000,000 ordinary shares and 500,000 preferred shares outstanding

Shares outstanding

Shares outstanding are common shares that have been authorized, issued, and purchased by investors. They have voting rights and represent ownership in the corporation by the person or institution that holds the shares. They should be distinguished from treasury shares, which is common stock held by...

.

Company XYZ buys 700,000 voting shares and 100,000 preferred ones.

Therefore, its voting interest is (700,000/1,000,000) = 70.00%, and its economic interest is ((700,000+100,000)/(1,000,000+500,000)) = 53.33%.

External links

• Common Stock vs. Preferred Stock
• Stock