What is “share consent”?
Share consent is a written affirmative approval from designated shareholders required before a specified action can be taken: distinct from voting, which only requires participation. Common share-consent rights are negotiated into shareholders agreements and certificates of designation, giving preferred-stock investors (especially VCs) veto power over actions that would affect their investment.
Actions typically requiring share consent
- Future financings at lower valuation (down rounds) or with senior preferences.
- Sale of the company below specified return thresholds.
- Charter amendments that affect preferred stock rights.
- Increases in the authorised share count.
- Creation of new classes of stock senior to existing preferred.
- Major debt incurrence above a threshold.
- Acquisition of other companies above a size threshold.
- Dividends or buybacks.
- Change of business focus.
Why investors require it
Voting alone often does not protect investors. A founder-controlled board could approve a transaction technically by majority vote but harm preferred shareholders. Share consent rights ensure preferred investors must affirmatively agree to enumerated decisions: turning voting into a true protection rather than a procedural step.
Share consent vs. related concepts
- Share consent vs. voting: voting requires participation only; consent requires affirmative approval.
- Share consent vs. protective provision: they are synonyms in many contexts; some lawyers distinguish protective provisions as the broader category and share consent as the specific mechanism.
- Share consent vs. board consent: share consent is at shareholder level; board consent is at director level: both may be required.
Under Turkish law
Under Article 421 of the Turkish TTK (Turkish Commercial Code), a qualified majority is required for certain resolutions in joint stock companies, but Anglo-American style per-class share consent is not directly regulated. For this reason, in Turkish venture capital investments share consent rights are regulated through the SHA (Shareholder Agreement) and are commonly implemented at the Cyprus/Delaware HoldCo level. Provisions of the SHA that conflict with the TTK may lack enforceability against the Turkish OpCo.
Do: negotiate share consent thresholds carefully: too broad disables management agility; too narrow leaves real protection gaps.
Don’t: agree to share consent rights without modeling the practical impact on future fundraising flexibility.
Sources. Turkish Commercial Code No. 6102. Statute links open the official consolidated Turkish texts on mevzuat.gov.tr.