Preferred Shares Have Voting Rights?

Recently, the share price of Hanjin KAL surged sharply. It began when a disclosure was released that Hoban Group had secured a stake in Hanjin KAL by raising it to 18.46%, raising the issue that a management control dispute could arise.
When a management control dispute breaks out, common shares with voting rights naturally become important, yet there are many cases where preferred shares, which have no voting rights, surge even more.
Let's look at what preferred shares are and why they surge.
However, unlike common shares, preferred shares have no voting rights at shareholders' meetings,
1. What are preferred shares?
Preferred shares are shares with the privilege of receiving dividends before common shares when the company distributes profits or remaining assets. In other words, preferred shareholders have priority over common shareholders in receiving profits or in the distribution of remaining assets upon liquidation.
2. Do preferred shares have voting rights?
- When the difference in common share ownership between competitors is small, there is a possibility that preferred shares may be used strategically to defend management control\ - If the company fails to pay the set dividend for a certain period, preferred shares may temporarily gain voting rights as compensation
- Accordingly, if no dividends are paid, voting rights are granted to preferred shares, and their value can rise as a means of defense in a management control dispute.
3. Closing the price gap with common shares
- When common shares surge on management control issues, preferred shares sometimes rise along with them on the perception that they are relatively undervalued.
4. Trading volume of preferred shares
- Preferred shares have fewer listed shares than common shares and do not trade in large volumes.
- So when trading volume in preferred shares rises because of a theme, the share price can surge even on small volume
In general, when a management control dispute breaks out, the share price often surges sharply.
But this too has a character similar to theme stocks, so once the dispute is resolved, the share price often falls back to where it was. We can see this clearly in last year's management control dispute between Korea Zinc and Young Poong.
In particular, preferred shares move with greater volatility than common shares, so if you want to invest in them, you need to put solid safeguards in place before investing.