Action by written consent is a procedure that lets a corporation’s directors or stockholders approve resolutions by signing a document rather than convening a meeting. No notice, no quorum, no gathering. In Delaware, which governs most U.S. corporations, board consents require every director’s signature, while stockholder consents require the same vote that would carry the action at a meeting attended by every share. The mechanics change depending on who is acting, what the certificate of incorporation says, and whether the company is publicly traded.
Where the Authority Comes From
Consent authority is a creature of state corporation law, and the state that matters is the state of incorporation, not the state where the business operates. Because more than half of publicly traded U.S. companies and a large share of private ones are Delaware entities, the Delaware General Corporation Law is the baseline most practitioners work from. Section 141(f) governs board consents; Section 228 governs stockholder consents.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting
States that follow the Model Business Corporation Act default the other direction: stockholder written consent requires unanimity unless the charter opts down to a lower threshold. Delaware permits less-than-unanimous stockholder consent unless the certificate of incorporation forbids it. If your company is incorporated outside Delaware, read the statute before assuming Delaware’s rules apply.
Even within Delaware, the certificate of incorporation and bylaws can tighten or eliminate consent rights. Some companies bar consent action for particular matters, some require a supermajority, and many public companies remove stockholder consent entirely. Start with the governing documents.
Board Consents Require Every Director to Sign
A Delaware board consent needs the signature of every director then in office. Nine of ten signatures is not enough. If a director is traveling, ill, or opposed, the consent fails and the board must hold a meeting, where a quorum can act by majority vote.2Justia. Delaware Code Title 8 Chapter 1 Subchapter IV Section 141
The same unanimity rule applies to board committees. A compensation committee or audit committee can act by consent, but every member of that committee must sign.
A director can sign a consent that takes effect at a later time, including a time triggered by a specific event, so long as the effective moment falls within 60 days of the instruction. The director can revoke the consent at any point before it takes effect.2Justia. Delaware Code Title 8 Chapter 1 Subchapter IV Section 141 That revocation window is real: a director who signs early keeps the right to pull back until the consent is actually operative.
Companies rarely modify the board consent rule. Most rely on it for routine business such as appointing officers, approving contracts, or ratifying committee decisions.
Stockholder Consents and Vote Thresholds
Stockholder consent works on a different math. Delaware requires the same vote that would be needed at a meeting where every outstanding share was present and voting.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting For an ordinary resolution needing simple majority approval, the signatures must come from holders of more than 50% of the total outstanding voting shares.
The denominator is total outstanding shares entitled to vote, not the shares held by stockholders who happen to participate. With one million shares outstanding, a majority action needs consents covering at least 500,001 shares no matter how many stockholders respond.
Higher meeting thresholds carry over. A charter amendment that would need two-thirds at a meeting still needs consents from two-thirds of outstanding shares. Delaware also requires separate class votes for certain amendments affecting a particular class of stock, even where that class would otherwise have no voting rights under the certificate of incorporation.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting
Setting the Record Date
The record date fixes which stockholders are entitled to sign. Getting it right heads off challenges from anyone who bought or sold shares during the solicitation.
The board can set a record date by resolution, but the date cannot precede the resolution’s adoption and cannot fall more than 10 days after it.3Justia. Delaware Code Title 8 Section 213 – Fixing Date for Determination of Stockholders of Record
If the board sets nothing, the default splits based on whether the action needs prior board approval:
- No prior board action required: the record date is the first date a signed consent is delivered to the corporation.
- Prior board action required: the record date is the close of business on the day the board adopts the enabling resolution.
The first scenario creates an unusual dynamic. Whoever delivers the first consent effectively sets the record date for everyone else, which can shape who is eligible to participate.3Justia. Delaware Code Title 8 Section 213 – Fixing Date for Determination of Stockholders of Record
The 60-Day Collection Window
All stockholder consents must reach the corporation within 60 days of the delivery of the first consent. Miss it, and the whole solicitation fails and must start over.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting
This is where consent efforts most often break. In a company with a broad stockholder base, collecting signatures takes coordination. The clock starts the moment the first consent hits the corporation, so sensible solicitors plan the logistics before anyone sends anything in. Delivering the first consent too soon can start the clock before you are ready to finish.
Revoking a Consent
Directors and stockholders can revoke a written consent at any point before it becomes effective.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting Once the action takes effect, that door closes.
For stockholders, signing does not commit you permanently. A written revocation delivered before the consent reaches the required threshold pulls the signer’s agreement back out of the tally. That makes the vote count a moving target for anyone soliciting consents. Consents with a future effective date remain revocable until that future date arrives, which can extend the window considerably.
What the Consent Document Should Include
A consent is a governance document. Auditors, lenders, and sometimes courts will rely on it, so drafting precision matters.
The document should identify clearly whether the board or the stockholders are acting. Each resolution should describe the action in enough detail that a third party reading the document years later can tell exactly what was approved. “Approve the transaction discussed at the last meeting” is the sort of phrasing that invites disputes.
The effective date deserves attention. A Delaware consent can specify a future effective time, including one triggered by an event, up to 60 days after signing.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting That is useful when the action must line up with a closing or a filing. Without a specified date, the consent generally takes effect when the last required signature is collected.
Signature blocks should show each signer’s name and capacity. For stockholders, add the number of shares held and the class of stock. Include the corporation’s full legal name, the state of incorporation, and the date of each signature. Consents can be executed in counterparts, meaning each signer can sign a separate copy and the copies together form one valid consent.
Verify names against the current board roster and stock ledger before counting anything. A signature from someone removed from the board last month, or from a stockholder who has already transferred shares, does no work.
Electronic Signatures and Delivery
Board and stockholder consents can be signed and delivered electronically. Delaware treats an electronic transmission as the equivalent of a written document and defines an electronic signature broadly, as any electronic symbol or process attached to a document and adopted with intent to sign.4FindLaw. Delaware Code Title 8 Section 116 That definition reaches standard e-signature platforms, typed names in emails, and click-through acceptances.
Federal law reinforces the point. The Electronic Signatures in Global and National Commerce Act prohibits denying a signature legal effect solely because it is electronic, for any transaction affecting interstate commerce.5Office of the Law Revision Counsel. 15 USC 7001 – General Rule of Validity
An electronic consent must be sent to an information processing system that the corporation has designated to receive such transmissions, and it must contain enough information to establish the date of delivery and the identity of the signer.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting A consent signed by a proxy holder and delivered electronically triggers additional verification rules.
One trap: a consent hand-delivered to the corporation’s principal office, an officer, or the registered agent must be in paper form. Electronic delivery only works when directed to a designated electronic system.
Notice to Non-Consenting Stockholders
When stockholders act by less-than-unanimous consent, the corporation must give prompt notice to every stockholder who did not sign and who would have been entitled to notice of a meeting on the same matter.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting The statute does not define “prompt” in days, so the safe practice is to send notice as soon as the action takes effect.
The notice should describe what was done. If the action requires a certificate filing with the Delaware Secretary of State, such as a charter amendment or a merger, the certificate must recite that consent was given under Section 228 rather than the usual language about a stockholder vote at a meeting.
Failing to give notice does not automatically void the action, but it exposes the company to challenges from the stockholders who were left out of the loop.
Public Companies and Schedule 14C
Public companies operate under a second layer. The SEC treats a consent solicitation as a proxy solicitation under the Securities Exchange Act.6eCFR. 17 CFR 240.14a-1 – Definitions The full proxy apparatus, including filing and disclosure obligations, can apply.
When a public company takes action by consent without formally soliciting proxies, it must file a Schedule 14C information statement with the SEC and distribute it to every security holder entitled to vote. That statement has to go out at least 20 calendar days before the earliest date on which the corporate action can take effect.7eCFR. 17 CFR 240.14c-2 – Distribution of Information Statement The 20-day waiting period gives stockholders time to review the information before the action is final.
Schedule 14C dictates the disclosures, including any substantial interest that directors or officers have in the matter. The first page must carry a bold-face statement that the company is not asking for a proxy.8eCFR. 17 CFR 240.14c-101 – Schedule 14C Information Required in Information Statement
Because of these rules, most public companies eliminate stockholder consent rights in their certificates of incorporation. The 20-day wait and the disclosure work often erase the speed advantage that consent is supposed to deliver. Private companies escape these SEC requirements, and for them consent remains a genuinely faster route than a meeting.
Filing and Recordkeeping
Once a board consent takes effect, it must be filed with the minutes of the board or committee proceedings in the same format as those minutes, paper or electronic.2Justia. Delaware Code Title 8 Chapter 1 Subchapter IV Section 141 Stockholder consents belong in the minute book alongside the other stockholder records.
Copies and reliable reproductions can substitute for originals as long as the reproduction is complete.1Justia. Delaware Code Title 8 Section 228 – Consent of Stockholders or Members in Lieu of Meeting That flexibility matters for consents signed in counterparts or delivered electronically, because the corporation may never hold a single original with every signature on it. A consent that authorized a material contract but never made it into the minute book can create expensive problems later, when the signed version cannot be found.