How is an action approved at a shareholder meeting?

Actions are approved based on majority vote. The first step, before the vote, is to make sure a quorum exists. A quorum is a fancy Latin word that basically means "enough people have showed up to a meeting to make it fair to say we actually held a meeting." Note that when it comes to shareholders, the importance isn't necessarily how many people show up to a meeting, but how many shares show up to vote. Hop over to the hypos for an example if you need help understanding this.

For the sake of this explanation, let's assume that a corporation has a total of 100,000 outstanding shares, which would mean at least 50,001 voting shares must be represented by the shareholders who show up. In other words, if 10 shareholders show up and, together, they own 60,000 shares, there is a quorum.

Now that a quorum has been met, the shareholders will vote on proposed actions for the corporation. For an action to pass, it will need more votes in support than in opposition. For example, let's say the action being voted on is, "Should we change the name of HypoCorp to HippoCorp?" In response, there are 20,000 votes in support, 19,000 votes in opposition, and 21,000 votes in abstention (meaning they chose not to vote). Even though 20,000 votes in support is not a majority, it is more than the 19,000 votes in opposition, which means the action will pass.