Changing the Director Voting Rules
Board of Director Decision Making
Written by Jason Gordon
Updated at November 28th, 2020
- Accounting, Taxation, and Reporting
-
Law, Transactions, & Risk Management
Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
- Marketing, Advertising, Sales & PR
- Business Management & Operations
- Economics, Finance, & Analytics
- Professionalism & Career Development
- Courses
How does the Board Change the Voting Rules?
As previously stated, the articles of incorporation, along with the bylaws, lay out the number of director positions and the voting procedure for electing those directors.
The shareholders hold the power to amend the articles of incorporation by a majority vote. This begs the question, can the shareholders avoid the above voting arrangements by holding a meeting and amending the articles of incorporation to be favorable to their intended voting action.
By default, the answer is yes. That is why it is important to include strategic safeguards within the articles of incorporation and bylaws to protect against such a situation.
Once common protection is to require that the board of directors initiate any action for amendment of the articles of incorporation before the shareholders can vote on the action.
Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP