Private Equity Minority Investments - Universität St.Gallen

Part Two: Legal Framework and Toolsrepresentative(s) not attending the board meeting count as no votes cast forany resolution. Such measure is, however, deemed problematic by BÖCKLIsince it negatively impacts the board’s decision-making capability. 1556 Onthe other hand, to facilitate decision making with respect to ordinarydecisions, 1557 yes and no votes cast can be defined as a calculation basis. Insuch cases, board members can submit blank votes that will not be countedas no votes. 1558(iii) Consent of Board Members Representing a Class of SharesAnother method by which to structure quorum and majority voterequirements is by basing them on the number of board membersrepresenting certain classes of shares or groups of shareholders. Forexample, the parties can stipulate that at least one director appointed byeach class of shares or each group of shareholders or the representative(s)of particular classes of shares or shareholder groups must be present (in thecase of a quorum requirement) or, in the case of a majority voterequirement, must consent to a board resolution in addition to the majorityvote requirement as defined by corporate law or in the articles ofassociation, to validly pass a resolution. 1559 Since the latter practice, therequirement of consent of particular board members, represents preferentialtreatment, such requirement must be objectively justified by corporateinterests (e.g., by the particular knowledge or industry experience of theboard member required for certain decisions).(iv) Ad Personam Veto RightsBoard members (and managing officers in a GmbH) must not be granted adpersonam veto rights against board resolutions (or resolutions of themanaging officers) at the corporate level. 1560 However, at the contractuallevel, the PEMI may negotiate for ad personam veto rights for its boardrepresentatives. 1561 Moreover, in a GmbH, veto rights against managingofficers’ decisions can be structured indirectly by stipulating in the articlesof association that certain decisions of the managing officers must be1556BÖCKLI, Aktienrecht, § 13, N 119.1557Decisions other than those listed in CO 704 I.1558See TANNER, Quoren, § 4, N 89.1559Requiring the presence or consent of particular board representatives is controversial. Infavor, FRICK, § 12, N 1446 (with respect to quorum requirements); TREZZINI, p. 274 et seq.(finding the requirement of consent of board members representing a certain class of sharesadmissible if stipulated in addition to the regular majority vote requirements).1560See FN 1524.1561See Section IV.E.3.3.3.248