This article is for Irish startup founders and company directors who need to understand how shareholder voting works and how to structure voting rights in their company.If you're raising investment and wondering how to maintain control while diluting ownership, or you're confused about what decisions require shareholder approval versus board authority, this guide covers voting structures, enhanced voting rights for founders, reserved matters in investment agreements, and the difference between ordinary and special resolutions.
Key Takeaways
Irish companies default to one vote per share, but Section 81 allows creating share classes with enhanced voting rights.
Ordinary resolutions need 50% approval for routine matters; special resolutions require 75% for fundamental changes like constitutional amendments.
Founders can maintain control despite dilution by creating shares with multiple votes per share, commonly 10 votes each.
Reserved matters and protective provisions in investment agreements give investors veto rights over major decisions beyond standard voting requirements.
Section 87 requires approval from affected share classes before changing their class rights, preventing majorities from removing minority protections.
Voting rights give you the power to approve major decisions about how the company operates and who runs it. Your company's constitution defines which decisions require your approval and how many votes each of your shares carries, with the default being one vote per share under Irish law.
What decisions can I actually vote on as a shareholder?
You vote on fundamental matters like appointing and removing directors, approving financial statements and dividends, and amending the company constitution. Major transactions like selling the company, issuing new shares, or changing the company name also require shareholder votes under the Companies Act 2014.
What's the difference between ordinary and special resolutions?
Ordinary resolutions require a simple majority (more than 50%) for routine matters like appointing directors or approving accounts. Special resolutions require at least 75% of votes and are reserved for more significant decisions like changing the company name, altering the constitution, or reducing share capital.
Can I create shares that give me more voting power than my investors?
Yes, you can create special share classes that carry multiple votes per share under Section 81 of the Companies Act 2014. A common structure gives founder shares 10 votes per share while investor shares have only 1 vote, allowing you to maintain control despite economic dilution. This must be clearly disclosed to investors and documented in both the constitution and investment agreements.
What are reserved matters and how do they affect my voting rights?
Reserved matters are specific decisions that require approval from particular shareholders beyond standard statutory requirements, typically giving investors veto rights over significant decisions. These contractual provisions in investment agreements create additional hurdles for decisions like changing the business model significantly, taking on debt above certain thresholds, or entering new geographic markets.
Can I issue non-voting shares to investors who just want financial returns?
Yes, Section 81 explicitly allows shares with no voting rights, which work well for passive investors who want dividends and capital distributions without involvement in management decisions. These shares typically have enhanced economic rights like preferential dividends to compensate for the lost voting power.
What happens at shareholder meetings and how do I vote?
Shareholder meetings provide the formal venue for voting on resolutions, with at least 14 days' notice required under Section 177. You can attend in person, appoint proxies to vote on your behalf, or participate remotely if the constitution allows electronic meetings.
Can my voting rights be changed or removed later?
Your voting rights can change through constitutional amendments by special resolution, but Section 87 requires approval from your share class before varying your class rights. This prevents majorities from unilaterally removing minority protections, though some weighted voting structures include sunset provisions that automatically convert enhanced voting shares to standard shares after events like an IPO.
What are class meetings and when do they happen?
Class meetings bring together only shareholders of a particular share class to vote on matters affecting their specific rights separately from other shareholders. For example, if someone wants to remove enhanced voting rights from founder shares, you as a founder holding those shares must approve the change in a separate class meeting under Section 87.
Can directors override or limit my shareholder voting rights?
No, directors cannot simply ignore or override shareholder voting rights established in the constitution or Companies Act 2014. While directors have broad powers under Section 158 to manage operational matters without shareholder interference, attempting to usurp shareholder voting rights on matters requiring approval could constitute a breach of directors' duties under Section 228.
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