5. DIRECTORS AND OFFICERS

This section establishes

• how many directors the JV shall have, who shall nominate them, and how they shall report.
• who shall nominate the chairman of the board.
• how officers are appointed.
• who shall be the President (the Chief Executive Officer).

Typically, you are assigned directors in proportion to the shares you hold. An ADC that has over 50% of the shares should have the majority of the directors. Be mindful of the powers given to the chair. A chairperson can either have a vote, or can merely preside at meetings and have no vote.

Be very attentive to language at this point, to ensure that you are not unwittingly awarding undue influence to a partner.

If your ADC is to have a minority position in a JV, make sure that the Heads of AgreementHeads of Agreement: a non-binding summary of the main issues on which the parties intend to base an agreement. includes protective covenants (see below, “Protective Convenants,” p. 6-37). The directors and officers have to follow the regulationsRegulations: rules that govern activities that are occurring on the land. contained in the Shareholder AgreementShareholder Agreement: a legally-binding document which describes the mutual obligations of the parties to a Joint VentureJoint Venture: commonly, a business to which two or more parties contribute the essential land, capital, and services, in return for a share in its ownership and control. (Note: the Joint Venture is very strictly defined under Canadian law.)., no matter who owns most of the shares. So long as the Shareholder Agreement clearly reflects the ADC's interests, even minority representation on the board will have significant influence.