Definition. In bitcoin, the quorum is the number of keys needed to sign (the M in M of N). In company law, a quorum is the minimum number of directors needed for a valid board decision.
The signing quorum
In a multisig wallet the quorum, often called the threshold, is the number of signatures the spending rule demands. A 2 of 3 wallet has a quorum of two. A 3 of 5 wallet has a quorum of three. The number is fixed when the wallet is created and cannot be changed later without moving the funds to a new wallet with a new rule.
Choosing the quorum is a trade off. A higher number makes theft and collusion harder, because more people or devices must be compromised. It also makes loss more likely to bite, because more keys must survive and be reachable. For most small companies, 2 of 3 is the common starting point; larger treasuries with more independent keyholders sometimes choose 3 of 5.
The board quorum
The second quorum is the one in the company's own rules. Approving a purchase, a sale or a change of keyholders is a board decision, and a decision taken without a valid quorum may be challenged later. The signing quorum and the board quorum are separate: a payment can be validly signed by two keys and still be unauthorised if the board never approved it.
Choose your country for where the board quorum comes from.
Many private companies use the model articles for private companies limited by shares, or articles based on them. Article 11 of the model articles sets the default quorum for directors' meetings at two unless the directors fix another number, and it cannot be less than two. Companies with their own articles must check those instead. Section 248 of the Companies Act 2006 requires minutes of directors' meetings to be recorded and kept for at least ten years.
In Delaware, section 141(b) of the General Corporation Law says a majority of the total number of directors is a quorum unless the certificate of incorporation or bylaws require a greater number, and unless the certificate of incorporation says otherwise, the bylaws may set a lower number, but never less than one third of the board. Other states have their own statutes, and an LLC follows its operating agreement. Minutes or written consents should record the approval.
Common mistakes
- Treating two signatures as proof of board approval.
- Choosing a signing quorum equal to the number of keys (3 of 3), so one lost key freezes the funds.
- Not updating the policy when the number of directors changes.
Related
Sources
Primary sources only. Each link was checked on 9 November 2026. Rules change, so confirm the current version with your adviser.
- Bitcoin BIPsBIP 11: M of N standard transactions (multisig)
- legislation.gov.ukCompanies (Model Articles) Regulations 2008, Schedule 1: model articles for private companies limited by shares
- Delaware CodeTitle 8, chapter 1, subchapter IV, section 141: board of directors, including reliance on reports in 141(e)
- legislation.gov.ukCompanies Act 2006, section 248: minutes of directors' meetings
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