Company A votes on whether an unprofitable business should be split. Management believes that analysts do not recognize the potential value of their business due to uncertainty in any of their unprofitable businesses. The company`s articles of association contain a super-majority provision that requires the approval of 90% of shareholders before the corporate measure can be adopted. By far, most measures considered by the U.S. Congress as part of the legislative process require only a simple majority to pass. However, some measures, such as impeaching presidents or amending the constitution, are considered so important that they require an absolute majority vote. A qualified majority vote is a vote that must exceed the number of votes that make up a simple majority. For example, a simple majority in the 100-member Senate is 51 votes and a 2/3 super majority requires 67 votes. In the 435-member House of Representatives, the simple majority is 218 votes and a 2/3 super majority requires 290 votes. In most states, the state legislature can override a governor`s veto of legislation.
In most states, a two-thirds majority of both chambers is required. [43] However, in some states (e.g., Illinois, Maryland, and North Carolina) only a three-fifths majority is required,[44][45][46] while in Kentucky and West Virginia only a normal majority is required. A majority vote or more than half of the votes cast shall constitute a common basis for voting. Instead of the basis of a majority, a supermajority can be specified with any fraction or percentage greater than half. [7] We can also speak of a qualified majority. [8] The usual majorities include three-fifths (60%), two-thirds (66.66%) and three-quarters (75%). Once introduced, the qualified majority requirement is very difficult to abolish due to the above-mentioned factors. To eliminate the qualified majority requirement, a corporation would have to amend its articles of incorporation, with the voting threshold generally based on votes cast as a percentage of all outstanding shares.
For companies with large shares, which are owned by brokers and not commissioned, it becomes particularly difficult to make a decision. From June 2018 to May 2019, 29% of management`s proposals to reduce majority voting, although supported by management, failed and received a median support rate of 98% of votes cast. Understanding the requirements of a company`s combination in the context of its ownership structure can help investors deal with potential governance risks. Two of the biggest challenges in implementing governance reforms are qualified majority requirements and a significant number of shares held by brokers, which are generally not dependent. Understanding these dynamics can potentially make it easier to connect with companies so they can improve their governance before it becomes too difficult. For example, it may be easier for start-ups to remove qualified majority voting requirements in their early stages if ownership is relatively concentrated and fewer shares are held by investors who do not have voting rights for their shares. In addition, to encourage greater board accountability, investors can talk to companies about their voting standards for uncontested board elections and monitor director election voting results and corporate responses to low levels of support. A good understanding of the impact of reconciliation requirements and proactive engagement with organizations will likely help manage governance risks before it is too late or too difficult.
To pass an amendment to the Australian Constitution, a referendum is required and usually requires a double majority: a majority of national voters as well as separate majorities in a majority of states (i.e. 4 out of 6 states). Although a qualified majority is required if a particular state is affected by a referendum, a majority of voters in that state must also approve the change. This is often referred to as a “triple majority.” The Council of the European Union uses qualified majority voting for most matters submitted to the institution. However, unanimity will be introduced for the issues most important to the Member States. [21] Article 7 of the Treaty on European Union, which allows the suspension of the rights of one Member State with the unanimous consent of all other Member States, is an example of this.