February 18, 2025

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Equality opinion

How Can Elon Musk Change Twitter Policy?

Elon Musk, the CEO of Tesla and self-described “free of charge-speech absolutist,” is now Twitter’s most significant shareholder. The day right after he introduced his buy, he was appointed to Twitter’s board of administrators.

After these bulletins, political conservatives flooded their Twitter feeds with phone calls for the reinstatement of previous President Donald Trump’s Twitter account. Meanwhile, some Twitter staff lamented that Musk’s sights on totally free speech could weaken their effort and hard work to make Twitter a spot of healthful, civilized discourse.

Elon Musk may perhaps impact Twitter’s guidelines. But even as its biggest shareholder and board member, can he seriously modify them?

Twitter and Musk

Let us start by getting a look at Twitter. Twitter is a publicly-traded organization with one particular course of stock. The top 10 holders of Twitter inventory own a mixed percentage of 46%. There are 12 board customers. The CEO is Parag Agrawal. Twitter’s founder is Jack Dorsey. Equally sit on the board.

Now let’s search at Elon Musk. Musk now holds 9.1% of Twitter’s shares. He far too is a board member. When he disclosed his shares, Musk declared himself a “passive investor” in the enterprise. According to the Securities and Trade Fee (SEC), the phrase “passive trader” refers to stockholders proudly owning far more than 5% of a business who have to certify that:

  • They did not purchase the shares in an endeavor to alter or control the enterprise
  • They didn’t acquire the shares as element of a deal to adjust or influence the manage of the organization

Passive traders really don’t have to comply with a large amount of the prerequisites or submit the paperwork that lively buyers do.

Musk Doesn’t Seem to be Fond of Twitter’s Speech Plan

Notwithstanding his SEC filings, Musk absolutely isn’t performing like a passive trader. Certainly, his tweets propose that he is, in point, interested in influencing, if not transforming, the firm’s insurance policies.

The SEC will seem at whether or not Musk follows the law, but assuming he has, the issue arises: Does Musk, as a main Twitter shareholder and board member, have the power to modify Twitter policy?

Board of Directors

There are two means of looking at the question. The very first is to aim on Musk’s authorized electricity. A corporation manages its business enterprise underneath the course of its board of administrators. Whilst the company’s officers manage its day-to-working day affairs, administrators make major conclusions, together with:

  • Appointing officers and setting their payment
  • Environment the procedures that officers put into practice, like those people relating to products, products and services, wages, and labor relations
  • Issuing new shares
  • Declaring dividends
  • Making other economical and capital adjustments
  • Proposing amazing matters, these types of as mergers, acquisitions, or dissolutions

Restrictions on Board Powers

Nonetheless, administrators do not have unlimited powers. Directors cannot act outside the house the company’s articles of incorporation. They can not break the law. And some steps initially need shareholder acceptance, this kind of as amending the firm’s posts or merging with a further company.

Voting

The board acts by vote. Typically, board members have equal voting legal rights. In other words, it is really one particular man or woman, 1 vote. Any motion on the element of Twitter’s board demands a greater part vote.

So wherever does that leave Musk? He’s one of twelve. As a board member, he can vote and provide on committees. But that’s the extent of his energy as one particular director.

Shareholders

And though Musk owns a whole lot of Twitter shares, his electrical power as a shareholder is also minimal. Shareholders have the power to have, obtain, and provide shares. They have the correct to inspect corporation files. They also have the electricity to vote at shareholder’s conferences based mostly on the amount of shares they own. But that is it. Though Musk holds a whole lot of Twitter stock, he genuinely can not change business plan on his individual with out possessing a the vast majority of the inventory.

What About Musk’s 90 Million Followers?

Which will get us to the 2nd concern. Musk could have constrained legal energy as a director and shareholder, but his true energy lies in the reality that he has virtually 90 million Twitter followers. He has huge reach and is active on his account. His followers are particularly loyal.

Musk’s tweets go markets. So a great deal so that he is sure by a 2018 consent decree to have legal professionals overview particular tweets ahead of he sends them (Musk has questioned a judge to terminate the decree).

The scope of his audience, not his company powers, presents Musk the skill to impact, maybe change, Twitter coverage. If he does believe that Twitter has been suppressing free speech, we may perhaps stop up observing Trump back again on the system.

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