EMINUTES places cookies on your device to give you the best user experience. By using our website, you agree to the placement of these cookies. Please read our updated Privacy and Cookie Policy.

7 • 2022

Who Needs to Sign a Corporation’s Annual Consents?

We have repeatedly stressed the need for corporations to comply with required formalities such as holding an annual meeting of shareholders to elect directors, followed by an annual meeting of directors to elect officers, and keeping minutes to document those actions taken at shareholders’ and directors’ meetings.[1] Shareholders and directors may, however, also take action by written consent without a meeting, as provided by the controlling law.

In Delaware, for example, unless otherwise provided in the corporation’s certificate of incorporation, any action required by law to be taken at a stockholders’ meeting may be taken “without a meeting, without prior notice[,] and without a vote, if a consent or consents, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.”[2] Directors of a Delaware corporation may likewise take action by written consent, but only if all of the board members consent in writing.[3] Written consents may be signed and delivered electronically.[4] The default rules for California corporations are similar, except that the unanimous written consent of all of the shareholders entitled to vote is required for the annual election of directors.[5]

We are sometimes asked who actually has to sign the written consents. For example, in a corporation with a sole shareholder and director, can the sole shareholder and director’s agent holding a power of attorney sign the necessary consents on the principal’s behalf? Directors must sign their own consents and cannot take action or vote by proxy.[6] Because directors must sign their own consents, it is easier and more practical just to have the sole shareholder and director personally sign both the director’s annual consent and the shareholder’s annual consent at the same time.[7]

[1] See, e.g., eMinutes, “Reducing Risk of Alter Ego With Some Simple Things” (Apr. 10, 2016).

[2] Del. Code Ann. tit. 8, § 228(a). Action is most often taken by consent in lieu of a meeting in closely held corporations with just one or a few shareholders, but the procedure is applicable to even widely held public corporations. See Pabst Brewing Co. v. Jacobs, 549 F. Supp. 1068, 1071 (D. Del. 1982) (“the broad language of Section 228 includes all Delaware corporations and does not limit in any way those shareholders or groups of shareholders who may exercise that corporate right” to take action by consent).

[3] See Del. Code Ann. tit. 8, § 141(f).

[4] See id. §§ 116, 141(f), 228(d).

[5] See Cal. Corp. Code §§ 195 (writing includes facsimile, telegraphic, and other electronic communication), 307(b) (consent by directors), 603 (consent by shareholders). If action is taken without a meeting by less than unanimous written consent, then prompt notice of the taking of the action must be given to those shareholders entitled to vote on the action who did not consent in writing. See id. § 603(b)(2).

[6] See OptimisCorp v. Waite, 137 A.3d 970, 971 n.8 (Del. 2016); Lippman v. Kehoe Stenograph Co., 11 Del. Ch. 80, 85, 95 A. 895, 897 (1915); Cal. Corp. Code § 7211(c) (a director of a nonprofit corporation “shall not vote by proxy”); 2 Fletcher Cyclopedia of Corporations § 427 (“The directors of a corporation generally cannot vote at directors’ meetings by proxy, but must be personally present and act themselves.”). As the court explained in Lippman, “a director cannot authorize any one to act for him, because his associates are entitled to his judgment, experience and business ability, just as his associates cannot deprive him of his rights and powers as director.” 11 Del. Ch. at 85, 95 A. at 897.

[7] Legally, a shareholder’s consent must be signed by the shareholder or by someone acting on behalf of the shareholder by proxy. See Cal. Corp. Code §§ 603(c), 705(a); Del. Code Ann. tit. 8, §§ 212(b), 228(d)(1); see also 2 Ballantine and Sterling California Corporation Laws § 172 (2022) (“Every person entitled to vote shares may authorize another person or persons to act by proxy with respect to those shares.” (footnote omitted)). A “proxy” is “a written authorization signed or an electronic transmission authorized by a shareholder or the shareholder’s attorney-in-fact giving another person or persons power to vote with respect to the shares of such shareholder.” See Cal. Corp. Code § 178. Therefore, a person authorized to act for a shareholder as attorney-in-fact through a power of attorney may vote the shareholder’s shares, or sign a consent on the shareholder’s behalf, but only if the attorney-in-fact is first authorized to do so in a separate proxy. In other words, before someone else can sign the shareholder’s annual consent on the shareholder’s behalf, the actual shareholder would first have to go to the trouble of (1) signing a separate proxy, or (2) appointing an attorney-in-fact who could then sign a separate proxy. Because the sole shareholder and director has to personally sign the director’s annual consent anyway, that is why we say it is just a lot easier to have the same person also sign the shareholder’s annual consent at the same time.