Casting votes is an issue that has come up recently with a client. They sound simple but there is a little bit behind them.
Firstly, casting votes are sometimes called “second votes”. They occur when a vote is taken in a meeting and there is an equal number of votes in favour as there is against.
Does your constitution allow a casting vote?
The first thing you must know is whether your constitution allows a casting vote to be exercised by the person in the chair. You MUST find that out before anything.
Many organisations allow their chairman, president, presiding officer to have a deliberative vote – that’s the vote they get because they are a member, as well as a casting vote to be used when there is “an equality of votes” or a tie.
Here are the important issues.
1. The casting vote can only be used if the person presiding has already cast their deliberative vote. So if the chair puts the issue to the vote, but does not vote him or herself and there is a tie, then the casting vote does not apply because they have not yet exercised their deliberative vote. (The deliberative vote should be used at the same time as everyone else votes – see the post on deliberative voting)
If, after they have exercise their deliberative vote there is a tie, then the casting vote can be exercised.
2. This is the really tricky bit for some people. A wise chair will nearly always exercise their casting vote to “preserve the status quo“. That means they will vote so the situation does NOT change. In most circumstances, that means that they will vote against the proposal although some proposals are worded so that a vote in favour preserves the status quo.
I can almost hear some people saying WHY????
The answer is that by preserving the status quo, the issue is free to be raised again at a later meeting when there is more support. But the reason wise people vote this way is that if the casting vote is used to change something, then the decision has in reality been made by one person – the person in the chair. As many people are in favour as are against and it is not a sound decision.
I have read research that shows that decisions that are made upon a casting vote nearly always get reversed at a following meeting and the people who regularly use their casting votes to make changes, are often challenged for their position when they come up for election.
Now there will be times when the chair will use their casting vote to make a change. These are things where there has been considerable debate over many meetings and a decision simply has to be made. These situations are rare but they do occur.
Bottom line is – use casting votes with great care.
My understanding of casting votes is that they were purely a mechanism to break a deadlock and whether or not a chairman had vast his or her deliberative vote was irrelevant.
Certainly the custom is for a casting vote to be cast “to retain the status quo” but, although I do not disagree with stated reasons as to “why” my understanding was that the custom related to the fact that in common law, casting votes do not exist and that if a vote is tied then a motion is automatically deemed to be lost.
The concept of a casting vote, then, is to assist “mere mortal” entities to actually come to a decision, even to allow for a change if, in the probably one out of 10 cases where a change may be warranted, that can be done.
What happens when the ‘status quo’ is ambiguous? In this example half of a committee thinks a comittee member is not eligable (to attend) while half think they are.
This was in the case of a ambiguous resignation statement that was later rescinded by that member.
Hi
Please could you tell me what is the position if a chairman
Will not leave his chairman position and uses his casting vote
All the time on important issues that might benefit him or another
Company that he is involved with?
In recent meeting of two Directors of a Super Fund,the Wife chaired the meeting to pass a resolution to sell a property Husband voted not to sell and Wife to sell.
Then the Wife used the casting vote to get things her way. Is this in order.
It depends entirely on the constitution of your Super fund.
If the rules give the chair a casting vote, then Yes, she can do what she did.
If the rules are silent, which they quite likely are, then custom dictates that the chair has a casting vote and so, yes she can.
Probably not the answer you want. It may be wise to seek legal advice – I am not a lawyer.
I belong to a family business and we are four shareholders, my father self mother and brother each holding 25%, upon signing an agreement in 2009 it was agreed if our agreed arbitrator dies, we will have our now accountant as the arbitrator, our original arbitrator passed away and so the accountant is the acting arbitrator, both my father (chairman) and myself director want him replaced due to a staff member being put in a. place of judgement and he will not be impartial which is the role of the arbitrator, there is a dispute as my brother and my mother insist on the original agreement, can my father use his casting vote in this instance.
I wish there was a simple answer. It depends on the rules you have which may in your incorporating documents or may be in the law under which you are constituted.
If your father (the chairman) does have a casting vote, then yes, he could use it to make the change. If he does not have a casting vote, then, of course, he cannot.
If the documents are silent, then it is usually customary for a casting vote to be available to the chairman.
Having said all that though, because it is a family, it is always better to attempt to resolve it without any acrimony. So perhaps a third option could be found that would be a compromise option but meets the needs and desires of everyone. I would suggest more talking towards a compromise.
Can this casting vote by the chair of a meeting be used by one director of a two director company to throw the other out? Assuming they are 50%/50% owners? would this not give the chair of the meeting, an upper hand? a conflict of interest? could they just say do it my way or your out?
Is this legal?
It has been a basic principle of good corporate structure for family company, for the sake of impartiality, to have an independent person as Chairman. Two person family enterprises of corporate nature will most regularly get into trouble.
Great comment. Thankyou Garry.