Yes. The court decided that this is legal. Illinois law says a 'share' is a piece of an 'ownership interest.' The court explained that an ownership interest can be the right to vote, the right to profits, OR the right to company property. As long as a share has at least one of these—and the right to vote is the one you can't take away—it counts as a real share of stock. Companies are free to set their own rules for different stock types.

No. The disagreeing judges argued that a share of stock must represent actual ownership of the company's money and assets, not just voting power. They believed that creating a stock that's only for voting is like creating a 'ghost share' that has power but no real financial connection to the company. They felt this goes against the whole idea of what a shareholder is and that the majority's interpretation of the law was wrong.

Yes, it’s okay because the law says a company can create stock with different rights, including some that don’t earn money as long as they can still vote.

No, it’s not okay because traditionally, owning stock means you should have some financial stake in the company, not just the ability to vote.

Yes. A class of stock that possesses only voting rights and no economic interests is valid under Illinois law. The Illinois Business Corporation Act defines shares as units of 'proprietary interests,' which the court interprets disjunctively to mean that shares may confer rights to control, rights to profits, *or* rights to assets. The Act and the Illinois Constitution only prohibit the elimination of voting rights from a share of stock; they do not mandate that shares must also possess economic rights. Corporations are granted broad authority to create different classes of shares with varying limitations and preferences in their articles of incorporation, and stripping a class of stock of its rights to dividends and assets falls within this authority.

No. A class of stock that is completely stripped of all economic rights is not a valid share of corporate stock. The statutory definition of 'shares' as units of 'proprietary interests' inherently implies an ownership interest, which must include a financial stake in the corporation's assets or earnings. Eliminating all economic rights leaves a 'disembodied right to manage,' which is not a share of stock. The majority's disjunctive interpretation of the prior statute is flawed, as it would illogically permit non-voting stock, a result that violates the Illinois Constitution. The Delaware case cited by the majority, Lehrman v. Cohen, is distinguishable because Delaware law, unlike Illinois law, permitted non-voting stock, indicating a different public policy regarding the separation of voting and economic rights.

Yes, the issuance of Class B shares is valid because they do not limit or deny voting rights. The Illinois Business Corporation Act allows shares to be issued with various rights and restrictions as stated in the articles of incorporation. The constitution and statutory law only require that shares must not be deprived of voting rights, not economic rights. Section 14 of the Act clearly expresses the intent of the legislature to allow parties to a corporate entity to create whatever restrictions and limitations they want with regard to their corporate stock by expressing such restrictions and limitations in the articles of incorporation. These rights and powers are limited only by the proviso that the articles may not limit or deny the voting power of any share. The constitution requires only that a shareholder not be deprived of his voice in management. It does not require that a shareholder, in addition to the management aspect of ownership, must also have an economic interest. When the relevant sections of the Act are read together with the constitution, it seems apparent that it was the intent of the legislature that the proprietary interests represented by the shares of stock consist of management or control rights, rights to earnings, and rights to assets. Under our laws, the rights to earnings and the rights to assets — the 'economic' rights — may be removed and eliminated from the other attributes of a share of stock. Only the management incident of ownership may not be removed. We find nothing in the declared public policy of this State to condemn stock of this nature. Indeed, the constitution and Business Corporation Act evidence a public policy of only prohibiting the removal of voting rights from the normal attributes of shares of stock.

No, the issuance of Class B shares is not valid because it strips away all economic rights, leaving only voting rights, which does not align with the traditional attributes of stock ownership under Illinois law. The majority's interpretation seems to be saying that the ownership incidents of ownership may be eliminated. What remains is a disembodied right to manage the assets of a corporation, divorced from any financial interest in those assets except such as may accrue from the power to manage them. In my opinion, what is left after the economic rights are 'removed and eliminated' is not a share of corporate stock under the law of Illinois. The governing statute defines 'shares' as 'the units into which the proprietary interests in a corporation are divided.' The words 'proprietary interests,' naturally interpreted, mean 'ownership interests.' The majority's interpretation of the earlier definition of shares is flawed and would have allowed for the issuance of non-voting stock, which has been held to violate the Illinois constitution. The only authority cited to support the majority's position (Lehrman v. Cohen) is based on Delaware law, which explicitly allows for non-voting stock, unlike Illinois law.

Stroh v. Blackhawk Holding Corp.

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