The Supreme Court of Nebraska has never had occasion to determine whether or not nonvoting preferred stock may be issued by a corporation in this state. The answer to this problem must depend upon the meaning of Article 12, section 5 of the Nebraska Constitution, which states:
“The Legislature shall provide by law that in all elections for directors or managers of incorporated companies every stockholder shall have the right to vote in person or proxy for the number of shares owned by him, for as many persons as there are directors or managers to be elected or to cumulate said shares and give one candidate as many votes as the number of directors multiplied by the number of his shares shall equal, or to distribute them upon the same principle among as many candidates as he shall think fit, and such directors or managers shall not be elected in any other manner; except that any mutual or co-operative company or association may, in its articles of incorporation, limit the number of shares of stock any stockholder may own, the transfer of said stock, and the right of each stockholder or member to one vote only in the meetings of such company or association.”
In compliance with this constitutional requirement, section 21-135 of the Revised Statutes of Nebraska, was passed by the legislature. This statute, and the above mentioned section of the constitution, are capable of two interpretations: (1) that they simply secure to stockholders the right of cumulative voting, or (2) that they secure the right of cumulative voting plus a requirement that all stock issued by corporations in this state must have voting rights.
Claire D. Johnson,
Corporations — Status of Nonvoting Stock in Nebraska,
33 Neb. L. Rev. 636
Available at: http://digitalcommons.unl.edu/nlr/vol33/iss4/13