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Can someone explain the power dynamics of a board, vs that of the shareholders? I always assumed that retaining a majority of shares between the founders would
by chrisduesing 16y ago
Can someone explain the power dynamics of a board, vs that of the shareholders? I always assumed that retaining a majority of shares between the founders would keep them in control of the company, but is it the case that the board has more actual power.
For instance; 2 founders hold 60% of the shares of their company collectively after a Series A. The investors hold 40% (lets ignore option pools etc). Now if each side had 2 board seats (plus a 5th seat held by a brought in CEO), does that mean the founders can in fact be outvoted?
- 3pt14159 16y agoYup. Shareholdership only matters in so much as your shareholders agreement dictates that it does. I could have 1 share of your company and control a hundred board seats, it doesn't matter. There are some things in law that make ownership of a certain % of shares important, but really its all about the shareholders agreement.