A “majority” refers to the specific number (or percentage) of votes from directors that are needed to pass a motion or make a decision. A majority is defined as more than 50% of the votes cast by the directors who are present at a meeting and entitled to vote.
A majority is an important tool in all boardrooms because it is used to determine the outcome of decisions made by a board.
When using a majority to pass a decision or vote:
- the vote must be supported by the percentage of directors required for a majority (as defined by your governing documents)
- the directors forming the majority must be present at the meeting and entitled to vote.
This ensures that the decision is made with the support of a significant number of directors and is more likely to reflect the views of the board as a whole and the best interests of the organisation and its stakeholders.
A majority requirement assists in preventing the board from becoming deadlocked or unable to make decisions. In the absence of a majority requirement, it is possible that a small group of directors could block the board from making decisions.
Some organisations may, for specific types of decisions, require a higher level of majority support. On some boards a special resolution might require the support of at least 75% of director votes cast in favour in order to pass. This higher majority threshold is used for important decisions, such as changes to the organisation’s constitution or significant financial transactions. The use of a higher threshold helps to ensure that these types of decisions are made with the highest possible level of support from the board.
In addition to using the majority for determining decision outcomes it is important for boards to have clear and well documented systems and processes on how they make decisions and determine the outcome of votes. Clear and well documented governance systems and processes ensure that board decisions are made in a fair and transparent manner and that all directors have an equal opportunity to participate in the decision-making process.
To recap, a majority is the specific number or percentage of votes needed for a board to pass a motion or make a decision. It is a key component in the decision-making process of many boards and helps to ensure that decisions are made with a significant level of support from all board members.
What is the difference between a majority and a quorum?
The difference between majority and quorum is that majority is more than half or 50% of the board while a quorum is the minimum number of members required for a board to officially conduct business and to cast votes, often but not always a majority or supermajority of board members.