Firing Founders, Boardroom Battles & Reserve Matters

When taking on outside capital, founders often misunderstand who truly holds the power. Owning the majority of your shares doesn't guarantee control, in fact, the board of directors ultimately holds the authority to fire a founder CEO.

David Lim, Founding Partner at TSF Law, joins Enterprise Explores to unpack the hard legal realities of founder-investor relationships. He reveals how shareholder agreements actually dictate boardroom power, the hidden dangers of investor veto rights, and how asking the right questions early on can save your company from public legal battles.

Learn More About:

• The Illusion of Control: Why retaining a majority shareholding does not guarantee control if investors hold a board majority, appoint key management like the CFO, or possess veto rights.

• The Power of the Board: How Section 211 of the Company's Act grants the board of directors, not the shareholders, the default authority to manage the business, including the power to fire a CEO with a simple majority vote.

• Reserve Matters & Forced Buyouts: How specific operational decisions requiring investor approval can slow down a company, and how breaching these reserve matters can allow investors to trigger a mandatory buyout or liquidate the company.

• Critical Shareholding Thresholds: The legal importance of owning 75% for special resolutions (like changing the constitution), 51% for ordinary resolutions (like changing directors), and 10% to formally request a general meeting.

• Strategic vs. Financial Investors: How financial investors prioritise exit economics and put options to protect their capital, while strategic investors focus on operational control and securing board seats.

• Building Resilient Partnerships: Why the healthiest founder-investor dynamics rely on setting clear expectations upfront, establishing simple quarterly KPIs, and preventing investors from interfering in daily operations.

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