Calculation of the Majority at Partner and Shareholder Meetings

Calculation of the majority at partner and shareholder meetings is not always easy. Fortunately, the Code of Companies and Associations (CCA) has clarified the rules in this area.

For partnerships (personenvennootschappen/sociétés de personnes), the rules are as follows. The CCA provides that when the partners meet and take decisions, they constitute a partners' meeting, a corporate body defined by law (Art. 4:12 CCA). The partners' meeting decides unanimously, meaning that all partners must be present or represented in order for the meeting to take decisions. The articles can provide that the partners' meeting shall take decisions by majority vote. Such a provision is valid except for changes to the essential object of the partnership, which must be approved unanimously. When stipulating that decisions may be approved by a majority, it is advisable to define the required majority and quorum. If no quorum is provided, it could be inferred that all partners need to be present and that decisions are approved by a simple majority of the votes cast. In general, unless provided otherwise, each partner has one vote regardless of the size of his or her stake in or contribution to the partnership.

For companies (vermogensvennootschappen/sociétés à capitaux), the general meeting of shareholders takes decisions by majority rule. There is no quorum required for most decisions. The number of votes a shareholder may cast is determined based on the number of shares held, with each share carrying one vote. In companies with capital, the number of votes is determined with reference to the percentage of capital represented by the shareholding (without regard to fractional shares). The articles may provide for shares with multiple voting rights and, except in the case of a cooperative company, nonvoting shares (which may nonetheless be allowed to vote in certain situations provided for by the CCA). In listed companies, each share carries one vote; it is possible to derogate from this rule and issue double voting shares, provided they are fully paid up and held for at least two years. 

To determine the applicable majority, reference is made to the rules on deliberating bodies, which in turn refer to the rules applicable to voting in Parliament (Art. 2:41 CCA). A majority means that more votes are cast in favour than against a decision. Only votes cast by those shareholders present or validly represented at the meeting are taken into account. Invalid votes, blank ballots and abstentions are not counted. The decision is rejected in the event of a tie, with one exception. In the case of a tie vote on an appointment (e.g. a director, the chairperson of the board or the statutory auditor), a run-off is held and the candidate that obtains the most votes is elected. 

In certain cases, the law requires a special 75% or 80% majority. In such cases, the rule is that invalid and blank votes and abstentions are counted as votes against, unless the law provides otherwise.  In most cases, the CCA expressly states that such votes are not taken into account. This is the case for amendments to the articles, changes to the corporate purpose, winding-up in the event of a loss of capital, and the approval of a merger or division. The CCA is silent on decisions to convert a company into another corporate form; for such a decision, invalid and blank votes and abstentions are added to the nays. 

The articles can provide for different rules, within certain limits, and increase the required majority (except for a decision to modify specific rights assigned to classes of shares).

Related : NautaDutilh ( Mr. Dirk Van Gerven )


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