Question: How do I retain control of voting rights in my startup?Answer:
Voting rights refer to decision making at both the shareholder and board (director) levels. This is largely a commercial question that comes back to the bargaining power between parties when negotiating rights in a Shareholders Agreement.
To retain control of voting rights at a shareholder level, you can:
- ensure that you retain the majority of the shares so that you can pass decisions as a shareholder.
To retain control of voting rights at the board (director) level, you can ensure that:
- you have a right in the Shareholders Agreement that allows you as a founder to always hold a board seat (appoint a director);
- key decisions vest with the board; and
- you have a degree of control over appointments to the board.