How Is Unanimous Consent Different From Affirmative Voting Right ?

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By unanimous consent, we mean that a resolution in a company passes by the general consent of all the shareholders and no shareholder opposes the resolution. If any shareholder opposes the resolution, then the resolution cannot pass without the formal procedure of voting. Shareholders by unanimous consent may conduct business without holding a shareholder meeting.

In case of affirmative voting, the mandatory presence of a particular shareholder in the quorum as well as his affirmative vote are both compulsory for the successful passing of a resolution. The resolution fails, in spite of having majority of votes, if such an affirmative vote is not cast. Affirmative voting rights will be effective only when the company incorporates it in its article of association.

In case of Unanimous consent, the presiding officer generally assumes consent of all members and as such, no formal voting takes place until someone objects to the resolution. On the other hand, in case of affirmative voting there is always a formal voting procedure.

Unanimous consent is also known by the name of general consent but it cannot be considered as a synonym of unanimous voting. Unanimous consent and unanimous voting are two different terms. Affirmative vote, on the other hand, is sometimes, also acknowledged by the name of "Reverse Veto Rights in Voting".

The purpose of unanimous consent is to protect the interests of minority shareholders while the purpose of affirmative vote is to protect the interests of investors. The securities appellate tribunal in the case of M/s Subhkam Ventures (I) Private Limited v. The Securities Exchange Board of India held that the clause that gave affirmative voting rights to the acquirer was only to protect the interests of acquirer and its investment and gave no control to the acquirer. The protective provision under the agreement was not in nature of day-to-day operational control over the company's business. Such provisions merely enable the acquirer to oppose a proposal, and not carry out any proposal on its bidding. A protective provision contained under the agreement imposed fetters on the company for the purpose of good governance.

Unanimous consent decisions takes place in closely held corporations, where shareholder actions are typically unanimous. In a larger, publicly held corporation, such actions are much less practical, especially because decisions of the shareholders affect a large number of people. This informal process of conducting business takes place in case of motions of little importance.

Affirmative voting method, which is a formal method of conducting business, is generally used in the case of Joint Venture Agreements. The clause providing for the "affirmative voting right" is incorporated in the articles of association of Joint Venture Company.
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