Force-the-Vote Provision Law and Legal Definition
Force the vote provision is a type of lock up provision used in mergers and acquisitions contracts. This contractual clause requires a company's board of directors to be put to vote of stockholders the merger transaction whether or not the directors continue to recommend the transaction. The shareholders then vote on the merger.
The following is an example of a case law on force the vote provision:
A “force the vote” provision in a merger agreement requires the board of directors to submit to shareholder vote the proposed merger, even if the board itself no longer wants the merger. The effect of such a provision is to hamper merger discussions with other entities because, until the shareholder vote is taken, it is not known whether the merger that is subject to the vote will or will not take place. [Fox v. JAMDAT Mobile, Inc., 185 Cal. App. 4th 1068, 1074 (Cal. App. 2d Dist. 2010)]
