Can a company be subjected to a hostile takeover if the person who wants to maintain control owns 51% and above

Answer 1

In general, the answer to your question is no. A person who owns more than 50% of a company owns control of that company and a hostile takeover should not be possible. However, each corporation has bylaws (while LLCs have operating agreements). These documents state the rules by which the business entity is governed. There may be rules contained within those documents that allow for a hostile takeover under certain conditions (i.e. medical ailments, mental incapacity, voting rights, etc.). The rules should be clear enough to determine how control could be shifted from the majority shareholder to others, which may open the floodgates for a potential hostile takeover.

Typically a company is managed by a Board of Directors, Managing Partners, or equivalent. Through the rules (Bylaws/Operating Agreements), they are granted control for operating a business entity, including conducting business, controlling finances, and any other functional duty. This is different than governmental control, which includes electing Directors/Managing Partners and other officials of the company (President, Treasurer, Secretary, etc.). Governmental control usually is placed in the hands of the Shareholders, so the shareholders are the highest level of decision makers for the company. Typically, Shareholder meetings are held to elect officers and directors and conduct other high level business. Votes are usually cast based upon the percentage ownership an entity has, but the corporate rules may dictate voting in a different manner. Ultimately, the results of these votes determine control of the company.