Canadian Securities Course (CSC) Practice Exam

What defines subordinated voting when it comes to shares?

1. Shares with higher profitability

2. Shares with lower risk

3. Shares with no voting rights

4. Shares given preferential treatment in voting power

The correct answer is: Shares given preferential treatment in voting power

Subordinated voting refers to shares that have an inferior status to other shares in terms of voting power. This means that even though shareholders holding these shares have voting rights, their vote holds less weight compared to other shareholders with equal number of shares. In contrast, shares with higher profitability or lower risk (options A and B) do not necessarily have any correlation with voting rights. Option C, shares with no voting rights, is incorrect because subordinated voting implies that shares do have voting rights, albeit with lower power. Option D, shares given preferential treatment in voting power, is the correct answer because subordinated voting is essentially a form of preferential treatment where certain individuals or entities hold more power in decision making compared to others.