Assigning a decision owner when founders disagree

When founders disagree, identify the authority for the specific decision before assigning an owner. Check the company’s rules and agreements, then decide whether an individual can make the call or whether directors or members must act.

If the documents do not settle the question, use an agreed governance or dispute route. Until someone with authority decides, do not treat a founder’s first move as approval.

Define the disputed choice

Write down exactly what must be decided and the date it needs a decision. Separate a narrow step from a broader commitment: demonstrating a feature internally is different from promising it to a customer, and each may have a different owner.

Ask each founder what outcome they want to protect and which fact or assumption drives their view. A gap in evidence, a difference in risk tolerance and a disagreement about authority need different responses; more data will not decide who is entitled to bind the business.

Check the existing authority

For an Australian company, check its constitution and any applicable replaceable rules under the Corporations Act 2001 (Cth). ASIC’s company-rules guidance explains that replaceable rules are in the Act; section 141 identifies which provisions are replaceable rules, and ASIC’s governance page sets out the rules by topic.

Where it applies, replaceable rule 2, section 198A, says the company’s business is managed by or under the direction of its directors, except for powers the Act or constitution requires members to exercise in general meeting. That rule does not, by itself, make an individual founder the decision owner; check the constitution and any delegation as well. The replaceable rules do not apply to a proprietary company whose sole director is also its sole shareholder; ASIC identifies special rules under section 135(1).

Check any shareholders’ agreement for decision rights, voting requirements or a dispute process. If the business is a partnership, check its partnership agreement for decision and dispute provisions.

For a decision that can be delegated, appoint one authorised person as the Approver. Set the decision’s boundaries, what commitment they may make, what input they need and when the matter must return for approval.

Use DACI to separate the work from the authority: the Driver gathers information and gets the decision made by the agreed date; the Approver makes the call; Contributors provide recommendations but do not vote; Informed people receive the outcome. DACI helps assign roles but does not create legal authority to bind a company.

If a company decision requires formal action, establish whether directors or members must decide and follow the applicable meeting and voting rules. A resolution is the formal way to make and note a company decision; resolutions can be passed without a meeting in certain situations.

Key Australian Legal Frameworks for Decision Authority

Set a route if authority remains disputed

If the founders still disagree about who may decide, take the question to the body or process specified by the company’s rules or an applicable agreement. Depending on those rules, that may mean a directors’ or members’ meeting and resolution, or a dispute process in a shareholders’ or partnership agreement.

At the outset, set a decision date and name the escalation trigger: if no authorised decision is made by that date, refer the question through the agreed route; escalate sooner if a commitment is due first. A missed deadline is not approval.

If no applicable document settles the route, pause the disputed commitment and obtain legal advice before proceeding. Do not invent a tie-breaker after learning which result it would favour.

Record the mandate and outcome

For example, suppose two founders disagree about demonstrating a software feature internally and promising it to a customer. Check authority for each decision separately; if the rules allow the internal demonstration to be delegated, name its authorised Approver, assign a Driver to gather input, and reserve the customer promise for its required approval.

Write the mandate in a decision note: “For [specific decision], [name] is the Approver under [authority], within [boundary]. [Name] is the Driver; input is due by [date]. If no authorised decision is made by [decision date], refer it to [agreed route].” If authority must be conferred or a resolution is required, use the valid company process rather than relying on the note alone.

For a company resolution, follow the applicable rules for a valid vote and record the resolution in the company’s records within one month. The minutes must be signed by the chair of that meeting or the next meeting. After the decision, record the outcome, what remains open and who must act or be informed.