What is a Voting Agreement Review?
A voting agreement is a legal contract in which shareholders reach an agreement on how they will vote on specific issues. It serves various purposes, such as combining voting strength for unified votes.
If you need to review a voting agreement, read the rest of this article for key terms to check, how to review the agreement for clarity, and why you should consider hiring a qualified lawyer for help with the review process.
What are Key Terms to Review in a Voting Agreement?
A voting agreement usually contains the following essential information to review:
- Voting commitment. The agreement should specify exactly how a shareholder must cast their vote in a specific way.
- Duration. Check how long the voting agreement will last and how it can be terminated.
- Topics or matters. Identify the exact subjects that will be covered when making decisions, such as board seats.
- Voting obligations. Check that parties who are required to vote have clarity about their duties.
- Voting thresholds. Verify if decisions require a majority or other threshold.
- Quorum requirements. If applicable, state if certain parties must be present before a meeting to begin and for any decisions to be valid.
How Do You Review a Voting Agreement?
Once you’ve checked some essential terms in a voting agreement, consider other important aspects of the arrangement so you don’t miss anything.
Explain the Voting Processes
It’s essential to identify when shareholders are required to vote in a certain way, and if these rules only apply to specific matters. This provides clarity and prevents ambiguity about the process.
Consider Deadlock Provisions
It’s worth thinking about what should happen if shareholders can’t reach the required majority on a decision. This can include establishing procedures to assist them, such as going to mediation or arbitration to settle on a decision.
Check Survival Provisions
It’s important to consider if any obligations will continue after the agreement comes to an end, such as confidentiality provisions. This is important to clarify in the agreement so parties understand their obligations from the start of the arrangement.
Verify Remedies
If a party breaches the agreement, there should be remedies available to protect their interests. This could include injunctions and monetary damages.
Review Voting Thresholds
Check what level of approval is required for various decisions, such as unanimous consent. This is important to include so that parties have clarity over who can approve or reject certain decisions, lowering the risk of disputes.
Consider Transfer Provisions
It could happen that a shareholder transfers or sells their shares. Your voting agreement should specify how to navigate this situation to prevent issues.
For example, it should state if the voting obligation continues to apply or if the rights will be transferred to a new shareholder. It’s also important to mention if approval or consent is important before a transfer can occur.
Do You Need a Legal Review of a Voting Agreement?
Since a voting agreement must be clear and detailed, you should hire a lawyer to review it for you. A lawyer will conduct various activities, such as:
- Identifying the parties and their voting interests. They’ll confirm which parties are bound by the agreement and what shares are covered.
- Reviewing all contract definitions. They’ll ensure that these are clear for all parties to understand.
- Analyzing the voting obligations. They’ll determine when parties can vote in a certain way and if obligations apply to all or only specified matters.
- Examining voting thresholds. For clarity, a lawyer will consider if decisions require a simple majority, supermajority, or unanimous consent.
- Evaluating control. They’ll help you consider if consent rights or voting arrangements give a shareholder more control than what was assumed.
- Checking transfer restrictions. They’ll assess if shares can be transferred without affecting the voting arrangement.
- Verifying deadlock provisions. The lawyer should determine what shareholders must do should they not be able to reach the specified voting threshold.
- Confirming all legal requirements. A lawyer will evaluate if the voting arrangements comply with applicable company law and other regulations.
- Revising any ambiguous wording. A lawyer will suggest revisions to the agreement so that it’s clear and specific.
Where to Find and Hire a Lawyer for a Voting Agreement Review
If you’re unsure of where to find a lawyer, you don’t have to call traditional law firms in your area. You can use an online legal platform, which makes it easy to connect with a qualified lawyer from the comfort of your home.
ContractsCounsel is one of the largest online legal marketplaces that gives clients access to a curated network of vetted lawyers. All lawyers on the platform have experience in contract drafting and review.
When asking a lawyer on the platform to review your voting agreement, all you have to do is post a request.
Here’s what to do:
- Go to the ContractsCounsel marketplace, where it’s free to post a project.
- Select ‘One-time project.’
- Choose ‘Contract review.’
- Post a project or request. Include some details of what you need so you can match with the right lawyers, such as if there are any specific sections in the agreement you want reviewed.
- Wait for bids. You’ll receive multiple bids from lawyers directly on the platform who are ready to help you.
- Review the lawyer information. ContractsCounsel provides extensive lawyer data, such as the lawyers’ location, expertise, credentials, years of experience, and client ratings for previously completed projects completed on the platform.
- Select a lawyer and hire them to review your voting agreement for a flat fee.
