How Can Elon Musk Change Twitter Policy?

Elon Musk, who is the Chief Executive Officer for Tesla as well as self-described “free-speech totalist” currently is Twitter’s biggest shareholder. After he had announced his acquisition Elon Musk was elected to the Twitter board of directors.

Following these announcements, many social conservatives inundated their Twitter feeds with requests for return of former President Donald Trump’s Twitter profile. In the meantime, some Twitter users complained the fact that Musk’s opinions on freedom of speech might hinder their efforts to establish Twitter an environment for civilized and healthy discussion.

Elon Musk may influence Twitter’s guidelines. Even as the most powerful shareholder as well as board member, is he able to change the rules?

Twitter as well as Musk

Let’s begin with a glance at Twitter. Twitter is a publicly traded corporation that has one stock class. The top 10 holders of Twitter stocks have a percent of 46 percent. The board has 12 members. the CEO of Twitter of Twitter is Parag Agrawal. The founder of Twitter is Jack Dorsey. Both of them are members on the board.

Let’s take a examine Elon Musk. Musk has 9.1 percent in Twitter’s share capital. Musk is also an active board member. In the moment he announced his shareholdings, Musk declared himself a “passive shareholder” inside the company. In the words of the Securities and Exchange Commission (SEC)”passive investor” refers to anyone who has more than 5% of the company “passive investor” means stockholders who hold greater than 5% of an entity that have to prove that they:

  • The shares weren’t bought to try and alter or influence the firm.
  • They did not purchase the shares in exchange for a bargain to alter or change the direction of the business

Investors who are passive don’t need to comply with all of the rules or fill out the forms that investors must submit.

Musk isn’t a fan in Twitter’s Speech Policy

Despite the fact that he has filed SEC reports, Musk certainly isn’t acting as a passive investor. Indeed, his tweets show that he’s, indeed determined to influence and, even if he doesn’t, changing the firm’s policy.

The SEC will investigate the extent to which Musk adheres to the law in the event that he did then the issue is the following: Does Musk in his position as a major Twitter shareholder as well as board member has the authority to modify Twitter the policy of Twitter?

Board of Directors

There are two methods to look at this issue. One is to concentrate on the legal authority of Musk. The business of a company is managed by a director’s board. While the officers of the business oversee its daily operations Directors make the major choices, which include:

  • Designating officers and determining their salaries
  • The policies officers follow, such as those that relate to services, products, wage and labor relations
  • Issues new shares
  • Declaring dividends
  • Other financial and capital modifications
  • The proposal of extraordinary issues including mergers, acquisitions or dissolutions

The Board’s power is limited. Powers

Directors do not possess unlimited authority. Directors can’t act outside of the terms of the company’s constitution. They are not able to violate the rules of the law. Some actions will need approval from shareholders for example, changing the articles of the company or joining with another.

Voting

The board’s actions are governed by votes. In general, members of the board have identical vote rights. That is, just one person and only one vote. Each action of the Twitter board needs an overwhelming majority.

What does this mean for Musk? Musk is one of 12. Being a board member the director can elect to vote as well as serve as a member of committees. However, that’s not all of his authority as only one director.

Shareholders

While Musk holds a significant portion of Twitter shares, his authority as a shareholder is limitless. Shareholders can purchase, own or sell shares. They also have the ability to look over company records. They can also exercise the right to participate in shareholder gatherings based on the amount of shares they have. That’s about it. Even though Musk owns a large portion of Twitter stocks, he isn’t able to change policy of the company by himself without holding an overwhelming majority of the shares.

How do you feel about Musk’s 90 million Followers?

That brings us to our next question. Musk might have the legal rights of an executive director or shareholder the real strength lies in his around 90 million followers on Twitter. His reach is immense and is actively using his Twitter account. The people who follow him are especially loyal.

Musk’s tweets have a tendency to move markets. In fact, Musk is bound through a consent decree in 2018 that requires lawyers to review certain tweets before sending them out (Musk is asking an arbitrator to end the consent decree).

The reach of his users and not the power of his company allows Musk the power to alter or even alter Twitter policies. If he believes Twitter has been stifling freedom of speech, it is possible that we will be seeing Trump return to the platform.

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