How is preferred stock counted for voting purposes?
Preferred stock typically has two types of voting rights. There are certain items as to which it votes separately from the common stock. These items include (i) so-called “protective provisions”, which prohibit the company from taking certain actions without the consent of the holders of preferred stock, and (ii) the right to elect a specified number of directors. With respect to all other matters, the holders of preferred stock vote with the common stock on an as-converted basis (i.e., they are entitled to the number of votes into which their shares of preferred stock are convertible). Section 242(b)(2) of the Delaware Corporation Law requires that, unless the charter provides otherwise, the holders of common stock vote separately as a class on increases in the authorized number of shares of common stock. This provision can give the holders of common stock considerable leverage in future financings. As a result, appropriate provisions preventing this outcome are typically incorporated
