People typically think about corporate board members having equal voting rights: One director, one vote. However, for Delaware corporations, that is not always the case.
Delaware Statute – Board Members
This unusual situation is the result of a Delaware statute.
Specifically, Delaware General Corporation Law Section 141(d) states, in relevant part:
[T]he certificate of incorporation may confer upon 1 or more directors…voting powers greater than or less than those of other directors.
Sometimes, as the statute expressly provides, unequal voting rights are a result of there being different classes of directors. For example, this might happen if founders vote for one class of directors, and investors vote for another class.
But even if there is one class of directors, they can have unequal voting rights.
Certificate of Incorporation Governs
Whatever the number of classes, if board members are to have unequal voting rights, the certificate of incorporation must so provide.
However much they may wish to do so, the stockholders and the board of directors cannot implement unequal director voting rights on their own.
Check out all posts about boards of directors.
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
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