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Supermajority Provision
(redirected from Supermajority Provisions)

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Supermajority Provision
In a publicly-traded company's bylaws, a provision mandating that the consent of more than a simple majority of shareholders is needed for certain actions. These actions, and the specific percentage needed for consent, are outlined in the bylaws and are often used as an anti-takeover measure. For example, a company may require that two-thirds of shareholders must approve of a merger or acquisition. Supermajority provisions exist primarily to ensure the company's independent survival, but they may limit the board of directors' authority in even a friendly takeover. See also: Board-out clause.
supermajority provision
A part of a corporation's by-laws that requires an unusually high percentage of stockholder votes in order to bring about certain changes. For example, a firm may require that 80% of shares approve a resolution to call a meeting of stockholders for any purpose other than the annual meeting. This provision makes a corporate takeover more difficult. See also board-out clause.
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The company's Restated Certificate of Incorporation requires the affirmative vote of the holders of not less than 80% of the total voting power of all the outstanding shares of voting stock of Massey in order to (1) declassify our Board of Directors, (2) eliminate cumulative voting, (3) remove supermajority vote provisions related to stockholder amendment of bylaws and (4) remove supermajority provisions related to stockholder approval of business combinations with a more than 5% stockholder.
Massey Energy Provides Update to Stockholders Regarding Corporate ... by PR Newswire
923, 958 (2005) ("Although historical evidence presents no express rationale for the supermajority provisions included in the Constitution, a more apt, albeit general, characterization is that they were intended to promote good decision making in instances where majority rule would have proved problematic in some respect.
A pragmatic defense of originalism by McGinnis, John O.; Rappaport, Michael B. / Harvard Journal of Law & Public Policy
The supermajority provisions clearly have a negative impact on Company shares, as they severely limit the ability of shareholders to influence the management of the Company.
Keweenaw Land Association, Limited ('KEWL') Investor Ronald S. ... by Business Wire
 
 
 
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