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Back To: BUSINESS ENTITIES, CORPORATE GOVERNANCE, & OWNERSHIP
Changing 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.