Veto
A veto is the right of a party to block a proposal or decision, often stipulated in an agreement or the articles of association.
The veto right confers on its holder the authority to block certain decisions without such decisions being capable of being overridden by a majority or another corporate body. This mechanism is frequently encountered in company law and in shareholders’ agreements to protect minority interests.
In practice, a veto is exercised in relation to strategic decisions such as mergers, amendments to the articles of association or appointments. It prevents a majority from compelling a minority to accept undesirable outcomes and promotes balanced decision-making within companies.
“The shareholder exercised his veto to block the proposed takeover.”
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