maybe one-partner, one-vote isn’t working.
by marc rosenberg
the rosenberg practice management library
most firms vote on a one-person, one-vote basis despite varying ownership percentages.
but is that always the best way? here are three better ways.
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voting done on an ownership percentage basis:
- essentially “disenfranchises” the minority owners. their vote doesn’t mean much, and it becomes tantamount to not having a vote at all. when they have no vote, they tend to get disenchanted and cease acting like partners. they may eventually leave.
- gives too much power to the majority owners.
one concern with one-person, one-vote is that the “power partners” could be ousted and/or outvoted by minority owners on critical issues, such as:
- changing the partnership agreement,
- allocating income,
- terminating and admitting partners, or
- entering into mergers and office leases.
the way to resolve this is not to conduct votes by ownership percentage. there are three better ways:
- require a “supermajority” vote on the critical issues. the supermajority would be 75 percent or more, not just a majority.
- if votes are taken on a critical issue, any partner can request that voting be done by ownership percentage.
- in certain situations, the partnership agreement can have specific wording that requires the vote of a certain partner or group of partners to pass.
most firms find that virtually all votes can be done on a one-person, one-vote basis. in fact, most firms tell me that they hardly ever take a formal vote on anything. many firms feel that if they have to call a vote based on ownership percentage, the underlying tension, animosity and unrest are a bigger problem than deciding how the voting should take place.