Founder of Companies give up part of there Ownership to board members who have voting rights. The cumulation of board members and the shares or % of ownership they own end up giving them more power over the Owner if the majority of them agree with each other.
u/Pres_Trump is right. And the best way to structure a startup to avoid this problem is setting aside voting shares separate from equity shares (like Google). Most people don’t do that though as it’s clearly less desirable to investors (they want to have a say), and costs money in legal fees that early stage startups typically don’t have.
Founder of Companies give up part of there Ownership to board members who have voting rights. The cumulation of board members and the shares or % of ownership they own end up giving them more power over the Owner if the majority of them agree with each other.
u/Pres_Trump is right. And the best way to structure a startup to avoid this problem is setting aside voting shares separate from equity shares (like Google). Most people don’t do that though as it’s clearly less desirable to investors (they want to have a say), and costs money in legal fees that early stage startups typically don’t have.