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Comment by keiferski | Hacker News Reader

Step 1: Don't give up a significant portion of your company.

That's not enough. Under most corporate bylaws the board has the ultimate power. You could own 90% of the shares and still get fired.

But if you own 90% of the shares, can't you just fire the board?

http://en.wikipedia.org/wiki/Golden_share

My understanding is that unless you have provision (in a shareholder's agreement for example) that gives you that power the answer is no. I believe that if you sued the company a judge would likely intervene on your behalf though.

Ultimately the directors are always elected by the shares, and unless there is something really strange about the voting rights, someone owning a controlling interest in the shares should be able to control election to the board, which in turn would allow that person to control the board. Controlling the shares + controlling the board = controlling the company.

The shares do elect, but the owner of the shares can be required to vote a certain way. You could sell 90% of your shares and add a "ELECTION OF BOARD DIRECTORS" clause to the agreement.

This is the same way drag along rights work.

depends on the voting rights of the shares.

If you own 90% of the shares, you are the board.

While witty, this is incorrect.

If you own 90% of the stock you should be able to remove or replace all the directors, and once you do that your new directors can rehire you. There may be a lag if the company's charter prohibits shareholders from acting by written consent or calling special meetings, but even if that were the case, anyone owning 90% should not be out in the cold for long.

It depends on the agreement.

For instance you may retain the stock, but have explicit agreements where specific investors get to have a specified representation on the board. Then no matter how much stock you own, you can't get rid of those investors.

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