A controlling stake is a certain number of shares in a company held by a shareholder. The owner of such a package can control the activities of the company and determine its strategic development.
Concept and types of block of shares
Block of shares - the number of shares of one JSC, which is under a single control. There are three main types of shareholdings.
Minority
This block of shares is sometimes called non-controlling. This is a small fraction of shares concentrated in one hand, which does not allow to significantly influence the decisions made. Nevertheless, their owner can request information about the work of the company, participate in meetings of shareholders.
Blocking share holding
This is a share of shares that allows its owners to override any decisions of the company and gives them the right to veto. The number of shares required to block the company's decisions can be spelled out in the charter of the JSC. If we are talking about a qualified majority of 3/4 of the votes, then 25% + 1 share will be the blocking one.
Controlling interest
This block of shares gives the owner control over the decisions of the OJSC, since he has the majority of votes at the meeting of shareholders.
It is believed that 5% of shares are sufficient for convening shareholders, 25% - for blocking most decisions of the meeting (for large JSCs - 20-30%). Owning more than 50% of the shares guarantees full control over the activities of the company.
It is worth noting that the price of large blocks of shares can increase if their possession allows them to influence the company's activities. The seller of the block of shares sets a premium to the share price.
Distinctive features of a controlling stake
A controlling stake allows the owner to make decisions regarding the functioning of the company, determine the prospects for its development, and appoint management (board of directors, head). But for some decisions, a controlling stake may not be enough. For example, to liquidate or reorganize a company.
How many shares do you need to own to own a controlling stake? In theory, this is at least half of all issued shares (50% + 1 share). Practically this amount may not be required, because at a meeting of shareholders, all holders of securities are rarely represented. Therefore, in most companies, decisions at a meeting are made by a majority vote of those present. As a rule, minority shareholders prevail in OJSCs. Moreover, the larger the company, the more dispersed its shares between shareholders. Often, 20-30% of all shares are sufficient to gain control over an enterprise.
At the same time, only ordinary shares have voting rights. Whereas the owners of preferred shares, although they receive high dividends, do not have the right to vote.
Major shareholders, company founders and top managers or the state can become the owners of controlling stakes. For example, the state today owns a controlling stake in such companies as Sberbank, VTB, Rosneft, Gazprom, Russian Railways.
