Under what condition can cumulative voting be utilized by shareholders?

Cumulative voting is a mechanism that allows shareholders to allocate their votes in a manner that can enhance their ability to elect directors of a corporation. This voting method is particularly beneficial for minority shareholders as it enables them to concentrate their votes on specific candidates, thereby increasing their chances of securing representation on the board.

The use of cumulative voting is typically governed by the corporation's articles of incorporation. For cumulative voting to be employed, it must be expressly authorized within those articles. When incorporated in the articles, shareholders can then exercise their rights to cumulative voting during elections for the board of directors. This means that without express provision in the articles, cumulative voting cannot be invoked, even if shareholders desire to use it.

This understanding underscores the importance of the corporate charter and the rights it delineates for shareholders. In contrast, simply being in a situation where half the shares are not represented, making shareholder agreements, or facing financial distress does not grant the authority to utilize cumulative voting unless that right is explicitly stated in the articles. Therefore, the correct answer rightly identifies that cumulative voting can only be utilized when it is expressly granted in the articles of incorporation.