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GLOSSARY

Golden share definition

Published by a LexisNexis Corporate expert

What does Golden share mean?

A single, nominal, special rights, preference share which entitles the holder in certain circumstances to outvote the other shareholders. Golden shares, like weighted voting rights, have the effect of imposing a restriction on the ability to alter the articles of association of a company. Such shares were commonly included in the constitutional documents of UK privatised companies, giving the government special powers of control despite no longer retaining ownership of a majority interest in the privatised company's shares.

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Deadlock—fundamentals

Deadlock—fundamentals A deadlock is where parties to an agreement have an irreconcilable conflict and are therefore unable to reach agreement. This term is often used in connection with corporate joint ventures (JVs), in particular 50:50 JVs where no single party has a controlling stake in the JV and therefore all decisions require unanimity. Deadlock scenarios can also arise in non-50:50 JVs, such as where certain decisions require unanimity or where there are more than two JV parties and the outcome of a vote results in no majority. Certain disagreements can lead to deadlock stifling the joint venture company (JVC) from functioning properly. At the outset, it is prudent to consider the ways in which a deadlock could be resolved. Therefore, joint venture agreements (JVAs) typically contain deadlock resolution processes (which are often stepped) which need to be followed in order to resolve the deadlock situation. Setting out deadlock resolution processes in the JVA will save time and costs should a deadlock scenario arise and will also assist the parties...

Deadlock in corporate joint ventures

Deadlock in corporate joint ventures A joint venture in which two joint venture parties each owns 50% of the shares of the joint venture company (JVC) is sometimes known as a deadlocked or deadlock joint venture. In such a joint venture, the joint venture parties must reach agreement on any decisions to be taken by the JVC; if they cannot agree on a certain course of action, the action will not be taken ie the status quo will be maintained. When will deadlock be an issue? The structure and management of a 50/50 joint venture will usually reinforce the deadlock position, eg: • each joint venture party will be able to appoint an equal number of directors to the board • the joint venture parties will take turns to appoint the chair of the board and the chair will not have a casting vote • each joint venture party will have equal voting rights, both at board and shareholder level • advance notice of matters to be discussed at...

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