Key Takeaways

  • Shareholder action by written consent, often called unanimous written consent, allows corporations to act without holding a formal meeting.
  • It streamlines decision-making for urgent matters like mergers, stock issuance, or bylaw amendments.
  • Unanimous written consent must meet statutory and bylaw requirements, and some jurisdictions allow majority consent instead of full unanimity.
  • The process saves time and costs but requires careful documentation to maintain legal validity.
  • Public companies face more restrictions than private ones, and notice requirements may apply to non-consenting shareholders.
  • Boards and shareholders should weigh pros and cons, ensure clarity in resolutions, and follow best practices to reduce legal risk.

Shareholder action by written consent refers to corporate shareholders' right to act by written consent instead of a meeting. This type of consent avoids some of the negative characteristics of shareholder meetings. A consent resolution, formally called a Shareholders' Consent to Action Without Meeting, is a written document that details and validates the procedures taken by shareholders within a corporation without requiring that a meeting occur between shareholders and/or directors.

In general, written shareholder consents require the same number of approval votes as would be required if the shareholder meeting actually occurred. Keep in mind that it's not necessary for a meeting to actually be in person these days either, as telephone and video meetings are common and may be included as acceptable methods of holding meetings according to a corporation's bylaws.

Shareholder action by written consent is also known as:

  • Shareholders' Consent to Action Without Meeting.
  • Notice of Action by Written Consent.
  • Shareholders' Written Consent to Action.
  • Action by Unanimous Written Consent.

"Unanimous Written Consent" is used most often in corporate contexts, but may also be used by limited liability companies (LLCs) and other kinds of legal entities.

Meetings Versus Consent

In public companies, shareholder business is typically conducted at formal shareholder meetings. These are often once a year, although it may be necessary to meet more often than annually. At annual general meetings, participants review and amend bylaws, elect directors and other important figures, approve auditors, and vote on various proposals and resolutions.

Meetings are usually comprised of action by corporate entities — the shareholders and Board of Directors. In a face-to-face or digital meeting, the secretary prepares the meeting minutes and files any approved measures. Minutes are then filed in the corporate minute book.

There are some negative aspects to meetings that make them less desirable than written consent. To participate in a meeting, people must be available at a certain time. Meetings might drag on far longer than is necessary to complete the tasks at hand.

Perhaps the corporation or its shareholders intend to take on particular actions but aren't interested in waiting for the next annual meeting. They could request a special meeting, but that may be difficult for people to attend.

The answer is action by written consent. Written consent is like a remote meeting, except in writing. During a regular meeting, meeting minutes record the actions taken during the meeting. With written consent, the same actions can be taken as long as written consent is completed by the required number of voting shareholders. There's no difference between meeting minutes and Consent to Action Without Meeting except that with the latter, a formal meeting has not taken place. It can save time for small companies or minor matters.

Advantages and Disadvantages of Unanimous Written Consent

Unanimous written consent offers corporations a faster, more flexible way to make decisions compared to holding formal meetings. The key benefits include:

  • Efficiency – Decisions can be approved quickly, avoiding the scheduling delays of shareholder or board meetings.
  • Cost savings – Eliminates expenses associated with physical or virtual meetings.
  • Flexibility – Especially useful for routine matters, small corporations, or companies with geographically dispersed shareholders.
  • Privacy – Sensitive matters may be resolved discreetly without public meeting records.

However, there are also drawbacks:

  • Potential exclusion – Shareholders not actively involved may feel bypassed if they do not participate in the consent process.
  • Unanimity requirement – In corporations where every shareholder’s signature is required, a single holdout can block the resolution.
  • Regulatory limits – Public companies often face restrictions, and some state laws impose notice requirements.
  • Record-keeping risks – Improper documentation could expose the corporation to challenges of validity.

How Does Shareholder Action by Written Consent Work?

Oftentimes, major decisions that are to be made at meetings include purchasing or selling another business, mergers, issuing stock, and settling lawsuits. Shareholders at shareholders' meetings and board members at directors' meetings make decisions called corporate resolutions.

If all participants understand the subject contents and are completely in agreement, the secretary prepares a Unanimous Written Consent document that expresses the issue and decision in detail. The consent resolution form is then signed by all board members or shareholders and the actions are recorded in the corporate minute book.

For shareholders to act by written consent instead of a shareholder meeting, the written consent document must include:

  • The state where the company is incorporated (relative jurisdiction).
  • Corporation name.
  • Chairperson name (typically the chairperson of the board, president, or secretary).
  • Shareholder names.
  • Resolution (decision).
  • Effective date of resolution (typically upon signing).
  • Certified resolutions, if applicable (in cases where resolutions must be verified).

Legal Requirements and Limitations

The ability to use unanimous written consent depends on both state corporate statutes and the corporation’s governing documents. Some states, such as Delaware, allow shareholder action by majority written consent unless the charter specifies otherwise, while other states require full unanimity.

Key legal considerations include:

  • Bylaw and charter provisions – These may expand or restrict when written consent is allowed.
  • Notice obligations – Non-consenting shareholders in some states must be notified promptly of actions taken.
  • Regulatory compliance – Public companies may face additional SEC disclosure requirements.
  • Fiduciary duties – Directors must still act in good faith and in the best interests of the company, even when acting by consent.

Written Consent Proposals

After a several year hiatus, shareholder proposals advocating for the right to act by written consent reemerged on ballots this proxy season and have gained average shareholder support of more than 54 percent. Although in 2010, the amount of businesses with written consent proposals on the bill was small, the increasing level of shareholder support was significant and likely influenced proponents to keep advancing proposals at more companies every year. Whether or not a public company receives a written consent proposal, they should all understand the pros, cons, and procedures involved with written consent in case a proposal occurs on future ballots.

Best Practices for Using Unanimous Written Consent

To maximize the effectiveness and legality of unanimous written consent, corporations should adopt consistent practices:

  • Use clear, specific resolutions – Ambiguous wording can create enforceability issues.
  • Maintain thorough records – Consents should be dated, signed, and stored with corporate records just like meeting minutes.
  • Establish internal procedures – Define when written consent is appropriate versus when a meeting should be called.
  • Ensure inclusivity – Provide all shareholders or directors the opportunity to review and sign.
  • Leverage technology securely – Digital platforms and e-signatures can streamline consent collection but must comply with state and federal laws.

Frequently Asked Questions

  1. What is unanimous written consent?
    Unanimous written consent is a process where all required shareholders or directors approve a corporate action in writing instead of holding a formal meeting.
  2. Is unanimous written consent always required?
    Not always. Some states, like Delaware, allow majority written consent unless the company charter requires unanimity.
  3. Can public companies use unanimous written consent?
    Public companies are more restricted. They may face SEC disclosure requirements, and shareholder notice rules often apply.
  4. What happens if one shareholder refuses to sign?
    If unanimity is required, a single refusal blocks the resolution. In states permitting majority consent, the action can still proceed.
  5. Are electronic signatures valid for unanimous written consent?
    Yes, if they comply with the federal E-SIGN Act and relevant state laws, e-signatures are generally valid for corporate consents.

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