Founders FAQ #5

The dups Founders’ FAQ is a compilation of the most common questions founders ask us about their startup, their fundraising or their relationship with investors.

Can I remain the director of a company, even if I no longer have a majority stake? Can I still have a say in some decisions?

Under Belgian law, it is the general meeting of shareholders that appoints the directors by a simple majority. As a consequence, decisions to be taken concerning the (members of the) board of directors are made by simple majority.

Thus, if there is no specific provision and you hold a minority stake, there are not any guarantees that you will be represented on the board of directors, and in consequence, that you will be able to veto certain decisions.

However, it is perfectly conceivable to contractually agree that certain shareholders, even minority shareholders, may be represented on the board of directors, and it is equally as conceivable to agree that certain decisions require a qualified majority. Be careful to avoid deadlocks by including in the shareholders’ agreement ways to solve them (e.g. mediation, third party decision, discussing the decision at the general meeting, etc.).

Furthermore, it is quite common, in a shareholders’ agreement, to ensure that a founding director is represented in the board of directors, and to agree on a qualified majority.

The collegial management body should be representative of the company’s shareholder structure. An investor who would want to have full control over this body surely should be a sign of trouble for the rest of the partnership.

You have a question about corporate governance or other topics? Let’s have a chat, we’d be happy to help!