Module 2 · Chapter 4

Reserved Matters

A minority owner can be outvoted at the board. On a short list of reserved matters it cannot: the company needs written consent from both funding owners, whatever the board decides.

≈ 11 min read 8-question test

In this chapter

  • What a reserved matter is, and why a minority owner needs a list
  • What is on the list, and how its money thresholds are read
  • How consent is asked for and given, and what silence means

4.1Reserved matters in one paragraph

At the board, A&W can be outvoted. Its two directors lose three votes to two when Ferris's two directors and the managing director vote together. A reserved matter is a decision the board cannot take on its own. The company may take it only with the prior written consent of both funding shareholders, Ferris and A&W.

Clause 5 of the shareholders' agreement sets the rule, and Schedule 2 lists 14 reserved matters. Lawyers often call this a veto, but the document says “consent”.

Key point

A board vote can be lost three to two, but a reserved matter needs a signature from each funding shareholder. On those matters, the minority's answer weighs as much as the majority's.

Also in this chapter

  1. Why a 35% owner needs a list
  2. Both consents, and no shortcut through the board
  3. The 14 items on the list
  4. “Exceeding” means more than
  5. The budget does most of the work
  6. Asking for consent, and what silence means
  7. Your job

Preview

The rest of this chapter opens with a free account. Every edition is free to read until 31 January. Open a free account by the end of that day and keep every edition published by then, for good. Open it from the edition home →