Non-voting shares and the terms of divestiture and limitation of right to vote (Comparative study in Iran and English Law)

AbstractThe right to vote is among the most important share-dependent rights, which is created to the benefit of the shareholder once he owns the title to a share, allowing him to participate in decision-making activities of the company’s assemblies. In might be the case that a company’s financial policies dictate selling of new shares in order to raise its capital, however at the same time, the managerial exigencies might require the maintenance of the company’s extant supervisory structure. This, in the English legal system, has enabled companies to issue shares that have no right of vote, in addition to limits applicable to right of votes of the shareholder. In the Iranian legal system, due to a legal lacuna, issuance of shares with no right of vote by a company is prohibited. Only in cases such as non-performance of the shareholder’s obligation to pay the nominal value of shares per the terms of the amended version of the Commercial Act of 1968, can a shareholder be divested of his right to vote. Furthermore, companies can in some cases limit the right of vote of a share, for instance it could be provided in the company’s articles of association that the right to vote for a shareholder is contingent upon him having a specific number of shares.