Shareholder written consent allows you to approve routine corporate actions (like option pool increases or 409A valuations) via e-signature, saving time and hassle. Always pre-brief your major investors before sending the formal document from your lawyer, and aim for near-unanimous consent to maintain trust. Never use it for controversial decisions like pivots or down rounds; those require a real-time meeting.
Key takeaways
- Use written consent for routine actions; call a meeting for anything controversial.
- Always send a 'soft approval' email to major investors before sending any legal documents.
- Legally, you may only need 51%, but practically, you need consent from all major investors.
- Have your lawyer draft the consent and file the executed copy in your official minute book.
- Poor record-keeping creates expensive legal clean-up during your next fundraise.
- Check your voting agreement for specific actions that require supermajority consent.
Corporate governance probably isn't why you started a company. But if you handle it poorly, it can kill your momentum, drain your focus, and damage your most important relationships. Shareholder written consent is a critical tool for getting necessary approvals without the time and logistical drag of a formal meeting.
Think of it as the asynchronous version of corporate governance. It lets you pass routine but critical resolutions by circulating a document for e-signature. This guide is the playbook an experienced founder or investor would give you for using it effectively.
The principle is simple: use written consent for non-controversial, routine actions. If a decision requires discussion, debate, or persuasion, you need a meeting. Trying to jam a contentious issue through with a written consent is a classic rookie founder mistake that screams disrespect to your investors.
Approving a standard 409A valuation: A routine, third-party valuation to price your options.
Increasing the employee option pool: Especially when the size of the increase was already agreed upon in principle during your last financing.
Electing a mutually-agreed-upon board director: The candidate has been vetted and informally approved by key shareholders.
Authorizing a stock split or bylaw amendment: Following a financing round to clean up the cap table, for example.
Approving a small, inside-led bridge round: For a convertible note where all major investors are participating and terms are straightforward.
Approving a new priced equity round: A Series A involves a new lead investor, a new valuation, and complex legal terms. This requires a real-time conversation.
Authorizing a pivot: You are changing the fundamental direction of the company. Your investors funded a specific vision, and you owe them a full discussion if you plan to alter it.
Removing a director or executive: This is a highly sensitive action that should never be communicated or executed via a cold legal document.
Approving a down round or…
Frequently asked questions
- What's the difference between Board Consent and Shareholder Consent?
- Board consent is for actions approved by your Board of Directors. Shareholder consent is for actions approved by your owners (stockholders). Many major actions, like creating an option pool or authorizing a financing, require both.
- What happens if a major investor refuses to sign?
- This is a major red flag that the action is more controversial than you thought. Stop the process, get on a call with them to understand their objection, and prepare to hold a formal meeting to resolve it.
- Do I legally need consent from *every* single shareholder?
- Usually no. Legally, you may only need the minimum number of shares required by law (e.g., a majority in Delaware). Practically, you need enough to satisfy your voting agreement and maintain all key investor relationships.
- How fast should I expect to get a written consent signed?
- Assuming you've pre-briefed investors, aim to have it fully executed within 3-5 business days. Your investors are busy; friendly and firm follow-ups are part of the process.
