Future Business Leaders of America (FBLA) Entrepreneurship Practice Test

In a corporation, what term refers to the rights of shareholders to vote on major company decisions?

1. Corporate Governance

2. Common Stock

3. Shareholder Rights

4. Board of Directors

The correct answer is: Shareholder Rights

The term that refers to the rights of shareholders to vote on major company decisions is "Shareholder Rights." This concept encompasses the various entitlements that shareholders have in a corporation, such as the ability to vote on significant matters, including mergers, acquisitions, amendments to the corporate charter, and election of the board of directors. These rights are fundamental in a corporation, allowing shareholders to influence corporate policy and direction based on their ownership stake. Corporate governance relates to the framework of rules and practices by which a company is directed and controlled, but it is broader and does not specifically denote voting rights. Common stock refers to the shares issued by a company, which come with specific rights, including voting, but is not a term specifically used to describe the voting rights themselves. The board of directors is a group of individuals elected by the shareholders to make major decisions and oversee the company, but it does not encompass the voting rights that shareholders possess directly. Understanding shareholder rights is crucial in the context of corporate structure and governance, as they empower investors to participate actively in the management of their investments.