Adjusting Voting Rights of Directors

Strebor123

Hi,

I am the director of a ltd company setup for 3 flats in a house. I currently own 2 shares with the other 2 flat owners having 1 each (So 50:25:25)

I have agreed to make the other 2 directors but want to ensure that this does not affect my voting rights. Can anyone offer some advice with regards to adjusting the voting rights of the directors to match the current 50:25:25 split?

Do I need to amend the articles of association? Does anyone know if there's any templates or anything that can be used to make the adjustment?

Thanks!

steampowered

This is possible but would need to be made very clear in the company's articles of association.

You would need to amend the company's articles by passing a special resolution of shareholders (i.e. the other flat owners would need to sign-off on it), and file a complete copy of the new articles with Companies House.

anselld

Voting rights are dictated by share ownership anyway. Appointing additional Directors does not affect this either way. No changes needed.

00ec25

as Anselld says, you are not altering the shareholding, you appear to merely be "elevating" the other 2 flat owners to the status of directors. No need to alter the voting rights as they remain the 50:25:25 split set out already in the company's articles

Strebor123

Hi,

Thank you for the responses.

I was under the impression that the directors were able to make some decisions without the involvement of the shareholders and that those decisions would now become a vote between all 3 directors. Am I misinformed in this respect?

Thanks!

00ec25

Strebor123 wrote: »

Hi,

Thank you for the responses.

I was under the impression that the directors were able to make some decisions without the involvement of the shareholders and that those decisions would now become a vote between all 3 directors. Am I misinformed in this respect?

Thanks!

you need to read the articles of the company

normally shareholders appoint (vote) directors

directors are left to run the company's day to day operations on behalf of the shareholders

directors report back to the shareholders (typically) once per year when they directors report and annual accounts is presented to the AGM at which the shareholders approve (vote) the accounts and report

how directors make decisions between themselves has nothing to do with shares and the voting rights conveyed by being a shareholder.

the articles should explain how directors can reach decisions and the mechanism for so doing, the fact one director has 2 shareholdings does not automatically give that person 2 votes when deciding issues between directors.

you need to understand that in a property management company each person can wear 2 hats simultaneously, a shareholder hat and a director hat. As a shareholder a person has a right to object to a director's decision and put the issue to a shareholders vote, but that would be rather cumbersome if every decision had to be voted on by shareholders.

steampowered

anselld wrote: »

Voting rights are dictated by share ownership anyway. Appointing additional Directors does not affect this either way. No changes needed.

No they aren't!

Share ownership only dictates voting rights at a meeting of shareholders.

Voting rights at a meeting of directors are different. Unless the articles state otherwise, each director has one vote - regardless of how many shares they own.

Most company business is approved by a vote at board of directors level. There isn't a great deal which needs to be approved by shareholders.