As a general rule, unless the legal documentation expressly states otherwise, a majority vote is required to make a decision on behalf of a business entity.

         In most settings, and for most issues, that works out very well.

         However, there are certain circumstances where a Group’s members have decided that something more than a mere majority should be necessary.

          For example, we have seen many practice arrangements where a senior doctor has brought another one in as an equal practice co-owner.  If nothing else were done, they each would have an equal vote and both would have to agree for a decision to be made.  In many such circumstances the documentation gives the senior doctor “the final say” in case of deadlock, for a period of time.

          In many group practices, the owner-doctors have agreed that certain decisions will require more than a mere majority vote.  Among the issues which may require a “super majority” vote are hiring/firing of a doctor, addition or subtraction of an owner doctor, asset purchases in excess of a certain dollar amount (eg. $50,000 in a year), and borrowing in excess of a certain dollar amount. 

           The type of super majority vote may vary as well.  For example, a Group may decide that an “over two-thirds” vote is needed to hire a doctor; an “over three-fourths” vote is needed to bring in a new practice owner; and unanimity is needed to sell the practice or liquidate the practice.

          What voting requirements fit each group are best established by an open and frank discussion among the parties.  Once matters are agreed to, make sure that the proper legal documentation is prepared and executed. 

Vasilios J. Kalogredis

>> back>>

Copyright © 2004 Kalogredis, Sansweet, Dearden and Burke, Ltd.