Voting | Business | Shareholders

A Quick Guide to Shareholder Voting for Startups

New startups should review their initial shareholder voting agreements and terms to determine how to best manage shareholder feedback.
Alex Hay
Written by Alex Hay

Most successful startup owners don’t have the luxury of making fully independent decisions, whether it’s because they’re beholden to a board of shareholders or have key investors to answer to.

If your startup business has been able to freely self-govern, that’s great! But since most businesses are legally required to install a board, it’s important to learn which options you have for managing their expectations.

If your startup has already formed its own board of directors, then read on to find out what to expect when once your shareholders have voting power.


An overview of shareholder rights

If your startup becomes a publicly-traded company, then the shareholders become your principal investors. This means they earn voting privileges over business decisions that could impact their ROI.

In fact, your company’s shareholders or even venture capitalist investors have the right to cast ballots for:  

  • Your board of directors' elections

  • Elections pertaining to internal business decisions, such as opening a new location or office, rebranding your company’s mission, or changes in key personnel matters.

  • A potential merger, acquisition, new stock options, and even your executive board compensation packages.

This may seem like a lot of power is being put into the hands of your shareholders and investors, but the big picture for your startup is growth.

 

Improving your startup's voting processes with secure, online voting

If you're willing to take the steps necessary to implement the right infrastructure, your startup’s internal and shareholding voting processes can be as intuitive and effective as you need.

For example, if your investors want to be involved in selecting new board members, why not use an electronic ballot tool that allows you to share their candidate profiles, nomination options or even write-in votes instantly?

Enterprise voting solutions like ours can help your startup businesses create a collaborative decision making environment that establishes more trust between your shareholders and executives.

Another thing to note is that while share owners do have a wide range of voting rights, your company’s bylaws or business plan should have clearly defined voting roles and scheduled shareholder meetings (in-person or virtual) to keep potential investors informed about what comes with stock ownership in your company.

According to Investopedia, the most common ways that shareholders are granted voting powers are either: “one vote per share, thus giving those shareholders with a greater investment in the company a greater say in corporate decision-making”, or, “alternately, each shareholder may have one vote, regardless of how many shares of company stock he or she owns”.

 

Updating company bylaws?

Your company’s bylaws are designed to control the internal affairs and activities of your major business initiatives, including outlining who is eligible to run for Board of Directors.

It’s ideal to write your election bylaws in with your initial business plan, but if you haven’t - don’t worry, many organizations and companies have to amend their bylaws later down the line.

Once you’ve defined voting roles and dates for your shareholder and board of director elections, ensure you’re able to get the turnout needed or quorum to run an efficient ballot.

If you need to learn more about using solutions for proxy, absentee or general business voting contact our Customer Engagement team to learn about customized decision tools that work with your five-year (or more!) plan.

 


 

Read more: Use Online Absentee Voting to Make Your Next Election More Accessible

 

Follow us: ebvote on Facebook

Originally published Jun 22, 2022, updated June 30, 2022

Subscribe to our blog

Stay up to date on the latest topics in your industry.