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    Voting Rights Versus Voting Power - A Distinction With A Difference?

    Yesterday's post raised the question whether California Corporations Code Section 400(a) precludes tenured voting.  That statute requires that all shares of any one class have the "same voting, conversion and redemption rights . . . unless the class is divided into series".

    Providence & Worcester Co. v. Baker, 378 A.2d 121 (1977) involved a similar challenge under Delaware law to a scaled voting provision.  Under that provision, each stockholder was entitled to one vote for every share of the common stock owned up to fifty shares, and one vote for every twenty shares more than fifty.  It was argued that this provision violated Section 151(a) of the Delaware General Corporation Law because it established discriminatory voting rights among shares of a single class of stock.  The Delaware Supreme Court rejected this argument based on a distinction between "voting power" and "voting rights"

    For present purposes, § 151(a) must be read in conjunction with § 212(a).  In our view, one must look primarily to § 212(a), and not to § 151(a), for the validity of the P & W voting restrictions.  In the final analysis, these restrictions are limitations upon the voting rights of the stockholder, not variations in the voting powers of the stock per se.  The voting power of the stock in the hands of a large stockholder is not differentiated from all others in its class; it is the personal right of the stockholder to exercise that power that is altered by the size of his holding.

    378 A.2d at 123.  
    No California court has adopted Providence & Worcester in a reported decision.  To do so, it would have to get past the fact that Section 400(a) refers to "voting rights" rather than "voting power" (as in Section 151(a)).