Altering Rules, Cumulative Voting, and Venture Capital

16 Pages Posted: 25 Jan 2016 Last revised: 7 Aug 2016

See all articles by John F. Coyle

John F. Coyle

University of North Carolina School of Law

Date Written: January 25, 2016


California shareholders have long enjoyed the statutory right to elect directors in private companies via cumulative voting. While this rule is often described as mandatory, it is more accurately characterized as a sticky default that is subject to a complex array of altering rules. Many of these altering rules are negative; they forbid the parties from contracting around the cumulative voting rule in particular ways. A few of these altering rules are positive; they tell the parties how to contract around the rule. This symposium contribution provides a detailed account of this legal regime and describes the ways it has influenced corporate practice in Silicon Valley. It then draws upon this account to offer some observations as to the utility — and disutility — of altering rules and cumulative voting more generally.

Keywords: Cumulative voting; altering rules; venture capital; Silicon Valley; California Corporations Code; contractarian; anti-contractarian; mandatory; default; sticky default

Suggested Citation

Coyle, John F., Altering Rules, Cumulative Voting, and Venture Capital (January 25, 2016). 2016 Utah Law Review 595, UNC Legal Studies Research Paper No. 2719849, Available at SSRN:

John F. Coyle (Contact Author)

University of North Carolina School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919-843-9634 (Phone)


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