Voting Pool Agreements

The right to vote is often one of the most legitimate rights of corporate shareholders. Shareholders can use different strategies to mobilize their voices, one of which is the pooling of votes. With this strategy, a group of shareholders agrees to vote in advance for the directors, making it more difficult to disrupt the vote. Although pooling of votes is generally legal, your shareholders` pact cannot allow it. For this reason, it is important to consult a lawyer before entering into a pooling agreement. A voting agreement is an agreement between shareholders to choose their shares in a certain way. Instead of delegating voting power to a third party, as is the case with an agent, each shareholder commits, in a voting contract, to respect the agreement. If the contract is effectively executed, any party may sue for the practical performance of the contract if another party refuses to comply with the contract. If an action is successful, the court orders the parties to vote on the shares in accordance with the voting agreement. Unlike proxy limited companies, voting agreements may apply for any length of time and should not be submitted to the company.

According to Section 7.31 of the RMBCA, a voting contract is valid if three conditions are met: once a valid administrative agreement is in force, the contract may be amended or terminated either by an agreement of all shareholders of a company at the time, or according to the terms set out in the agreement. When a company „enters the stock market“ by listing its shares on a national exchange, all existing management agreements are automatically suspended. RMBCA, Section 1.40 (18A). Voting agreements also have some drawbacks compared to voting companies. In particular, because a voting agreement is a contract, there is less room for manoeuvre to exercise future margins of appreciation. For example, if the future is not clear, a confidence in the law may set general decision guidelines for an agent and allow the agent to make the final decision, whereas in a voting agreement, each party will likely make its own choice, which could nullify the objective of the agreement.