Also known as: written consents without a meeting · action by written consent · unanimous written consent
Written by attorneys — see sources below.
A statutory mechanism permitting shareholders or directors to approve corporate actions by signing written consents instead of convening a formal meeting. The consents must satisfy any statutory minimum vote thresholds or unanimous requirements specified in the articles or bylaws. Nonconsenting shareholders receive prompt notice when less than unanimous consent is used.
Shareholders of Walker Valley Produce hold 60 percent of the voting shares and sign written consents removing a director. Because the consents represent more votes in favor than against and cumulative voting is not authorized, the removal takes effect without a meeting. The corporation records the consents in its minutes.
The directors of Wolverine Steel circulate a proposed resolution by email. All directors sign written consents approving the resolution. The action binds the corporation even though no physical meeting occurred.
Robert F. Broz served as president and sole stockholder of RFB Cellular, Inc. (RFBC), which held the Michigan-4 cellular license, and as an outside director of Cellular Information Systems, Inc. (CIS), a publicly held Delaware corporation and competitor in the cellular telephone business. CIS had recently emerged from Chapter 11 bankruptcy proceedings in 1994, during which it divested fifteen cellular license systems and entered a loan agreement restricting new acquisitions and debt. In May 1994, Mackinac Cellular Corp. sought to sell the adjacent Michigan-2 license through broker Daniels & Associates, which contacted Broz regarding RFBC's possible acquisition. CIS was not offered the license because Daniels viewed it as not viable due to CIS's financial condition. Broz later signed a confidentiality agreement at the request of Mackinac, and received the offering materials pertaining to Michigan-2. On June 13, 1994, Broz discussed the opportunity with CIS CEO Richard Treibick, who stated CIS was not interested. Similar responses came from directors Peter Schiff and Stanley Bloch. Meanwhile, PriCellular, Inc. pursued acquisition of CIS, entering share purchase agreements with six directors in June 1994 and launching a tender offer in August 1994 at $2.00 per share, with closing delayed due to financing issues until November 23, 1994. Broz submitted written offers to Mackinac for the purchase of Michigan-2 on August 6, September 6 and September 21, 1994. On November 14, 1994, RFBC agreed to purchase Michigan-2 for $7.2 million. PriCellular closed its tender offer nine days later, replaced the CIS board, and on March 2, 1995, CIS sued Broz and RFBC in the Court of Chancery. After trial, the Court of Chancery imposed a constructive trust on the agreement to purchase Michigan-2 and directed that the right to purchase the license be transferred to CIS. Broz and RFBC appealed the judgment to the Supreme Court of Delaware.
View caseUnder the Model Act, written consent need not be unanimous if the articles permit action by the minimum votes required at a meeting. Some states and older rules require unanimity for shareholder action without a meeting.
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The corporation must give nonconsenting voting shareholders written notice of the action within ten days after the consents are delivered.
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Yes, provided the number of votes cast to remove exceeds those cast against removal and cumulative voting rules are satisfied. The articles or bylaws may impose a higher threshold.
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…time’ (i.e., while the opportunity to act with effect continues).” Id. While it is true that contemporaneous decisionmaking or unanimous written consent is required for board action (8 Del. C. § 141(f)), in our view, this testimony of the CIS board was probative and should not have been wholly discounted. See n. 5, supra . :…