What are board written consent agreements? Boards of directors meet as often as necessary to evaluate the startup’s current and future performance.
Board meetings are also an opportunity to examine risks and look for ways to expand the company. For the majority of board concerns, regular business meetings are suitable and sufficient.
Certain issues require immediate attention and cannot always wait for the boards to meet at a convenient time. The technique of unanimous board written consent agreements was specifically created for this reason.
Boards can accept items without holding a formal, in-person board meeting if they follow the standards for unanimous written consent.
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Here is the content that we will cover in this post. Let’s get started.
- 1. What to Consider Before Proceeding With a Board
- 2. What Situations Require Consent to a Unanimous Board Meeting Resolution?
- 3. How to Write a Resolution for a Board Meeting
- 4. Written Consents Vs. Meetings
- 5. Minutes and Written Consents: What are the Golden Rules?
- 6. Unanimous Board Written Consent Via Email
- 7. Minutes of Meetings
- 8. Secure Digital Voting
- 9. Conclusion
What to Consider Before Proceeding With a Board Written Consent Agreement
Boards must understand their state’s legislation, as well as the procedures for board meetings and voting. State statutes govern the board’s criteria for meetings and voting.
Holding official board meetings must meet the constraints, conditions, or exclusions outlined in their company’s bylaws.
Boards should be aware of when meetings must be scheduled in advance and whether they can meet via phone or videoconference.
All board directors must approve the action in writing or by electronic transmission before a board can take action on an issue without conducting a formal meeting.
Board directors may give their consent using a PDF with an executed signature page transmitted through fax or an e-signature. Or an email confirming their approval, depending on the rules.
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What Situations Require Consent to a Unanimous Board Meeting Resolution?
A variety of concerns may arise that require the approval of the board of directors. Certain transactions and situations require board approval under state corporate regulations.
When issuing stock, for example, boards must have unanimous approval.
The types of acts that boards must authorize are generally outlined in the company’s charter or other governing instruments. These include the investor rights agreement and operational matters,
When a third party is a party to a substantial contract, they may need board approval.
When the board wants to offer formal permission for business actions quickly, the unanimous consent approach is ideal.
Let’s look at a financial transaction as an example.
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For a long time, the board has been working on the deal. The board is aware that the deadline is approaching, but the deadline has yet to be set.
The board has had plenty of opportunities to consider the topic, and they have reached an agreement on the transaction’s conditions. On the last day of the meeting, the board must take action on the matter.
It isn’t something that they can postpone until the next board meeting. However, scheduling a special board meeting or a board call to reach an agreement at the last minute is tough.
Now the transaction documentation is complete, and the package is ready for stockholder approval. The best way for the board to offer final approval is through written consent.
It’s not a good idea to use unanimous board meeting consent for just about anything that requires board approval.
The board chair does not need to verify a quorum, and the board does not need to meet in person. That is if the topic has a clear agreement and everyone agrees.
For routine items that do not require board approval or more significant occurrences that the board has previously addressed and decided on, the board can employ unanimous consent.
Unanimous consent cannot replace regular board meetings. During board meetings, boards can also approve unanimous board written consent agreements and resolutions.
They can shorten the meeting and allow more time to consider more essential issues.
How to Write a Resolution for a Board Meeting with Unanimous Consent
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The specific text of the board meeting consent resolution or agreement is one of the items included in the unanimous written consent.
The agreement might be sent through email with updates from the last meeting or marked copies with red lines. These notations indicate the modifications that could be made.
Also, the phrasing should also include enough information for the board of directors to make an informed decision.
Unanimous written approval can be expressed in the form of an email message with the subject line “Email-vote Yes Electronic Approval.”
When all of the directors have provided their consent, the unanimous consent becomes effective. The minutes of board meetings must have detailed records of unanimous consents.
If that’s how the company generally keeps them, officials can document them electronically or manually on paper.
If you use board management software, the board of directors can add a digital signature on their device, which will immediately update in the cloud.
This is an excellent time-saving technique as it’s more convenient than gathering signatures on paper.
Here are the steps to writing a written consent agreement:
- You should state clearly at the top of the unanimous consent agreement that this is the document’s aim. A good example could be “Action by Unanimous Consent of the Board of Directors of [name of corporation]”. You might wish to add “in lieu of a meeting of the board of directors” if you make the resolution outside of a board meeting.
- Begin the resolution by stating that the undersigned board of directors will decide on behalf of the corporation. And in the corporation’s best interests.
- Include a sentence stating that the following individuals (the directors) unanimously agree to accept the resolutions listed.
- Describe the motion for which you are seeking approval. Write this in great detail so that the directors understand what they are signing.
- Declare that the board of directors has the power to make such a decision.
- If you decide outside of the meeting, make it clear that the agreement will be reached through separate documents. You don’t need to provide this if you deal with it in a meeting. Or through a board portal where everyone may collaborate on the same document.
- Include the directors’ signatures, the corporate seal, and the date the resolution was passed.
The corporation’s final director signs the document granting the board written consent agreements which become effective immediately.
You should retain the responses with the directors’ signatures and the resolution’s text on file. You’ll save this information for at least the period specified in your country’s laws and the company’s constitution.
However, you should indefinitely save it as a record of the corporation’s officers reaching the decisions they did.
Written Consents Vs. Meetings
There are various reasons why you would prefer written consent over waiting until the next board meeting to take a unanimous consent motion. The following are some of the reasons for obtaining written consents:
- Delivery speed: There is not enough time to call a full meeting if the resolution is time-sensitive. As a result, when the law and organization rules allow it, a written resolution is the best option.
- Convenience: Directors may be unable to attend a meeting. They may be too far away to change plans, or they may be in a different time zone, making even a virtual meeting difficult. You are not required to establish a quorum at any given time. It’s convenient to be able to respond to a resolution at their leisure.
- Audit trail: When you utilize a board portal for written unanimous consent resolutions, all signatures are in one location, time-stamped, and saved in the cloud for simple auditing.
- Money-saving: Passing resolutions in this manner is far less expensive than paying for a full meeting, including room rental, lodging, travel, and catering.
The following are some of the reasons why a meeting should pass a unanimous consent resolution:
- Division: Written consent only works when all of the directors are in accord. If there is a chance for disagreement on a matter, a meeting allows the board to discuss the resolution more efficiently to reach a consensus. Even if no one agrees to a written resolution, you must convene a meeting.
- Management involvement: Management can indicate their support for the decision by holding a meeting recorded in the minutes. This demonstrates a united front.
- Flexibility: Only unanimous decisions require written consent. You cannot use this method for any other business that requires a simple majority vote. This implies that a decision-making meeting is always possible.
Minutes and Written Consents: What are the Golden Rules?
- Always send your legal counsel copies of signed minutes and signed board written consent agreements.
- Maintain a clean work environment. File the minutes and consents by year and then by date. If you submitted to the board any supporting materials to approve (such as a board deck or a list of option grants), keep them with the minutes and consents. Save emails as well if you have conversations via email.
Unanimous Board Written Consent Via Email
Several states permit unanimous written consent through email. Just because something is legal doesn’t imply it’s a secure way to vote on a lawful board.
Personal or corporate emails are at risk of hacking unless board directors vote using a highly secure board management software system.
There’s no way of knowing for sure if each board director voting is who they claim to be.
The vote would be nullified if a board director’s email account got hacked and all board directors voted in favor of a particular topic.
Another issue with email voting is receiving ambiguous or deceptive responses. Unintentional votes and, in some situations, legal issues might readily result from a vague response.
Consider how many times you’ve mistyped an email address and it ended up going to the wrong person or, worse, no one at all.
Furthermore, you must hope that all board members receive the email, open it, and respond to it.
Minutes of Meetings
Minutes of meetings are merely a record of what happened and what got decided at the meeting. It can be comprehensive and detailed or short and to-the-point.
The essential element is to ensure that the minutes cover the following: choices made, next steps planned, and identification and updates on action items.
Your lawyer can help you prepare it for you or set up a template that you can use to draft it yourself.
Each Board or Shareholder meeting should get documented in minutes, which should be signed off on by the Chairman of the Board or the Board Secretary.
Keep supporting material (a “board deck”) with the signed minutes if you present it to the Board/Shareholders for use during the meeting.
Secure Digital Voting
It’s crucial to get unanimous written consents right. Using a secure voting technology that interacts fully with your communications platform is the most foolproof way to vote by unanimous written consent.
Because only authorized users have access to a board management system, it removes the chance of someone impersonating a board director.
Board directors are confirmed to be who they say they are, thanks to stringent security measures. The integrity of the voting procedure is preserved by using a board management system created with secure voting in mind.
Board meetings provide an opportunity for board directors and managers to get to know one another and improve their working relationships.
As a result, boards should meet in person frequently so that directors and management may have some critical face-to-face interaction, which is vital for creating relationships.
A unanimous consent board resolution is a quick and straightforward way to get the board’s business done.
This method can deal with matters where the entire board is in accord without the need for debate or a formal vote.
This type of resolution reduces the inconvenience and expense of collecting members in one place when the board needs to decide between board sessions.
Because unanimous board written consent agreements and decisions require the signatures of all members, it could be a lengthy and paper-intensive process.
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