Reserved Matters Schedule Design in Dual Jurisdiction Joint Ventures
Cross-border reserved matter schedules require mirrored local articles of association to override statutory director duties and ensure local enforceability.
Supermajority Vote
Meaning
Voting requirement that specifies a higher threshold than a simple majority to approve a corporate action or constitutional change. Adoption of a supermajority vote protection in the bylaws of a company prevents a small group of shareholders from making radical changes without broad support. This threshold is often set at two thirds or three quarters of the total voting power.
Minority Protection
Small investors gain more influence when the board cannot act without their consent. The presence of a supermajority vote requirement forces the majority to negotiate and seek compromise. This protection is especially relevant during hostile takeovers or major asset sales.
Deadlock Potential
High thresholds can make it difficult for a corporation to take necessary actions during a crisis. If the required supermajority vote is not reached, the proposal fails and the status quo remains. This inertia can be damaging if the company needs to pivot quickly to meet new market challenges or if a minority group uses its power to block essential restructuring efforts during a period of financial instability.
Resolution Scope
Certain fundamental decisions always require a supermajority vote under most corporate laws. Mergers and liquidations are the most common items subject to such an approval level. These actions represent permanent changes to the nature of the investment.