Meaning
A governance mechanism allows the owners of a corporation to approve a decision without convening a physical or virtual meeting. Shareholder written consent involves the circulation of a formal resolution that members sign to signify their agreement. This process is used for routine matters or when all parties are in unanimous agreement on a specific course of action that requires immediate approval.
Operational Speed
Efficiency in utilizing shareholder written consent saves the administrative costs of booking a venue and providing notice for a formal assembly. It allows a startup or a closely held company to move quickly on fundraising or board appointments. The record of these signatures carries the same legal weight as a vote taken in a boardroom during a regular meeting.
Legal Limitation
Many jurisdictions and company bylaws restrict the use of shareholder written consent for major events like a merger or a change in the articles of association. Some rules require that the consent be unanimous to prevent the majority from bypassing the minority without a debate. Verification of the signatures ensures that the document is authentic and reflects the true intent of the owners.
Filing Requirement
The signed shareholder written consent must be entered into the minute book of the corporation alongside the resolutions of the board.
