by Claudius Du Plooy

9 Important Questions About Unanimous Shareholder Agreements

3. How can the USA affect Board Representation?

Except in the case of a USA where the board is stripped of all of its powers, a shareholder`s influence over the day-to-day issues of a company will generally be manifested through the appointment of nominees to the board of directors. Certain shareholders may be given the right to appoint nominees to the board. If nominees are to be appointed, consider:

  • Under what circumstances is a shareholder’s right to nominate directors reduced or terminated?
  • If the circumstances resulting in curtailment of the right to nominate are remedied, is the right reinstated?

Directors who are nominees of a particular shareholder are still subject to fiduciary duties to act in the best interest of the company in the first instance, and not the shareholder who nominated them.

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