supermajority provision

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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.
References in periodicals archive ?
Second, minority owners can hold up asset sale transactions if a so-called super-majority provision exists in your governing documents.
The decision was made under the super-majority provisions of VimpelCom's charter, which require the affirmative vote of eight out of nine board members to approve an acquisition.
In 1988, for example, only 24% reported having super-majority provisions or shareholders' rights plans, less than half the prevalence noted above.
Keith Kennedy, president and chief executive officer of Watkins-Johnson Company said, "We are pleased that shareowners voted in favor of abolishing the outdated shareowner super-majority provisions from WJ's charter and bylaws.