A controlling interest is an ownership interest in a corporation with enough voting
stock
In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
shares to prevail in any
stockholder
A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a trust or partnership) that is registered by the corporation as the legal owner ...
s' motion. A majority of voting shares (over 50%) is always a controlling interest. When a party holds less than the majority of the voting shares, other present circumstances can be considered to determine whether that party is still considered to hold a controlling ownership interest.
In the United States,
Delaware corporation
The Delaware General Corporation Law (Title 8, Chapter 1 of the Delaware Code) is the statute of the Delaware Code that governs corporate law in the U.S. state of Delaware. Adopted in 1899, the statute has since seen Delaware become the most imp ...
s have a 2/3 vote requirement for a motion to pass. In theory, this could mean that a controlling interest would have to be over two-thirds of the voting shares.
A 2019 study published in the
Virginia Law Review
The ''Virginia Law Review'' is a law review edited and published by students at University of Virginia School of Law. It was established on March 15, 1913, and permanently organized later that year. The stated objective of the ''Virginia Law Revi ...
said dual-class stock structures, common to newly public technology companies, creates governance risks and costs, including the potential loss of
economic value
In economics, economic value is a measure of the benefit provided by a good or service to an economic agent. It is generally measured through units of currency, and the interpretation is therefore "what is the maximum amount of money a specif ...
for non-voting shares held by public investors.
See also
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Consolidation (business)
In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into a few much larger ones. In the context of financial accounting, ''consolidation'' refers to the aggregation of financial statements of a gro ...
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Holding company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
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Minority interest
In accounting, minority interest (or non-controlling interest) is the portion of a subsidiary corporation's stock that is not owned by the parent corporation. The magnitude of the minority interest in the subsidiary company is generally less than 5 ...
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Parent company
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies. A holding company usually does not produce goods or services itself. Its purpose is to own shares of other companies ...
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Subsidiary
A subsidiary, subsidiary company or daughter company is a company owned or controlled by another company, which is called the parent company or holding company. Two or more subsidiaries that either belong to the same parent company or having a s ...
References
Shareholders
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