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We think the term "stock," as used in the [consolida-
tion] statute, is clearly intended to mean stock with a
potential voting power which, if asserted, will be
effective in the management or control of the corpora-
tion. [Erie Lighting Co. v. Commissioner, supra at
886.]
With the foregoing in mind, the court in Erie Lighting Co.
v. Commissioner, supra, proceeded to examine the facts before it,
including the nature of the matters on which the preferred stock
of ELC had the right to vote, and made certain judgments about
the nature of those various matters. Based on that examination,
the court found that the ELC preferred stock had the right to
vote on many matters that it determined were "usually reserved to
the stockholders" (stockholder matters) but that it did not have
the right to vote in the election of ELC's board of directors,
unless dividends with respect to that preferred stock remained
unpaid for two quarterly periods, a condition that had not arisen
during the years in question. Id. at 883, 885. The matters that
the court in Erie Lighting Co. determined were "usually reserved
to the stockholders" included increases or reductions of capital
stock of the company, increases in its capital indebtedness, the
number of directors serving on ELC's board of directors, the
place of its principal office, and the time of its stockholder
15 (...continued)
Elec. Co. and Howes Bros. Hide Co. cases. Erie Lighting Co. v.
Commissioner, supra at 886.
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