Supermajority

  

In a situation where decisions are made by vote, the typical threshold to get anything done is 50%-plus-one. So...you need half of everyone’s vote plus one more to get a proposal passed.

However, that’s not always the case. Sometimes you need a super majority. The term refers to a different, higher threshold for getting a particular measure enacted.

An example in government comes from the vote needed to overcome a presidential veto. In that case, 2/3 of the House and Senate need to vote for something in order to overcome a veto. Not a majority...a super majority of 2/3.

In corporate terms, a company's bylaws will spell out the voting rules and procedures. Certain decisions may require super majority votes by shareholders.

Related or Semi-related Video

Finance: What is non-voting stock?4 Views

00:00

finance a la shmoop- what is non-voting stock? hmm well it's stock that doesn't

00:08

vote. bet you're shocked to hear that. most people need a PhD in finance to [stock wears an "I didn't vote" sticker.

00:13

understand that notion. but really that's it in most cases common stock carries

00:17

with it the right to vote. and in fact it's the common shareholders who elect

00:22

the board of directors. but every now and then a potentially hostile investor

00:26

comes along and buys or wants to buy a big chunk of stock in a company. well the

00:32

amount might be a block large enough to elect that potentially hostile investor

00:37

slate or the group of people that investor wants to place on the board to

00:40

represent her evil intentions .when that happens companies will often create a

00:45

class of common stock similar in every way to its normal common only with its [stock checklist of privileges listed]

00:51

voting rights stripped away .that way the investor can own an economic interest in

00:56

the company but not monkey with the board.

Up Next

Finance: What is Cumulative Voting?
6 Views

What is Cumulative Voting? When public companies have ballots for shareholders to vote for board members, shareholders have a total number of share...

Finance: What is a proxy?
8 Views

What is a proxy? Proxy statements are documents that are sent to shareholders of public companies that contain detailed information on agenda subje...

Find other enlightening terms in Shmoop Finance Genius Bar(f)