Also known as: unanimous written consents · unanimous consent · written consent
Written by attorneys — see sources below.
A method by which directors or shareholders approve corporate action without holding a meeting when every person entitled to participate signs a written document setting forth the action.
Upland Industries sues Upstream Petroleum over a supply contract. After the answer is filed, Upland seeks to add a fraud count. All directors sign a single written consent authorizing counsel to stipulate to the amendment. The court accepts the filing without a motion because the unanimous consent satisfies the corporate-authorization requirement.
Ulf Ulfsson and Ursula Upton own a vacation home acquired during marriage. All three shareholders of their closely held corporation sign a unanimous written consent reclassifying the home as a corporate asset. The writing satisfies the requirement for corporate action without a meeting.
Universal Motors has three shareholders who wish to avoid an annual meeting. Each signs a written consent electing the same slate of directors. The consents are delivered to the corporation and become effective without any gathering of shareholders.
Ursula Ureña receives an insurance payment after a fire damages corporate real estate. All directors sign a unanimous written consent directing that the proceeds remain corporate property. The writing prevents automatic reclassification outside the corporate estate.
Utopia Pharmaceuticals shareholders holding 60 percent of the voting shares sign a written consent removing one director. Because the consent is less than unanimous and cumulative voting applies, the removal fails even though the numerical threshold for removal is met.
Urban Utley, a director of Upland Industries, proposes that the corporation buy property from his wholly owned subsidiary. All directors sign a written consent approving the purchase after full disclosure. The consent validates the transaction despite the conflict of interest.
In October 1977 Dr. Athalie Doris Joy filed a shareholder derivative suit in the United States District Court for the District of Connecticut on behalf of Connecticut Financial Services Corporation, later Citytrust Bancorp, Inc., against its wholly owned banking subsidiary Citytrust and its officers and directors. The complaint asserted common-law claims for breach of fiduciary duty and violations of the National Bank Act arising from a series of loans made by Citytrust to the Katz Corporation to finance construction of an office building in Norwalk, Connecticut, and sought recovery of approximately six million dollars. The underlying transactions began in 1967 when Citytrust entered a twenty-year lease for space in the planned building. In January 1971 Katz obtained a four-million-dollar construction mortgage in which Citytrust participated for five hundred thousand dollars while Chase Manhattan Bank supplied the remainder. Unsecured advances from Citytrust to Katz grew steadily, reaching nine hundred thousand dollars by December 1972 and one million eight hundred forty thousand dollars by June 1973. In November 1973 Citytrust obtained a blanket second mortgage on the building and other Katz properties. By April 1975 Citytrust had extended more than two million six hundred thousand dollars in loans and, as a condition of refinancing arranged with Lincoln National Life Insurance Company, assumed a thirty-year master lease guaranteeing the six-million-dollar Lincoln loan. National Bank Examiners classified portions of the Katz debt as doubtful in 1975 and substandard earlier. On August 18, 1976 the Citytrust board authorized additional loans that caused the total indebtedness to exceed the ten-percent statutory limit, after which Citytrust charged off two million dollars. In June 1977 the Katz partnership conveyed title to the building to Citytrust in exchange for releases, and Citytrust assumed the six-million-dollar Lincoln mortgage. Second Nutmeg Financial later purchased the building but subsequently defaulted, returning ownership to Citytrust. After the Supreme Court decided Burks v. Lasker, the boards of Citytrust and its parent created a Special Litigation Committee consisting of two newly elected outside directors, Marion S. Kellogg and Ernest C. Trefz. The Committee retained independent counsel, investigated for nine months, and issued a report recommending dismissal as to twenty-three outside defendants and possible settlement with seven inside defendants. The district court permitted limited discovery on the Committee's bona fides, placed the report under seal, granted summary judgment for the twenty-three outside defendants, and Joy appealed both the judgment and the sealing order to the Second Circuit.
View caseYes. Modern statutes require unanimous written consent of all directors entitled to vote on the matter. A majority is insufficient even if the same result would have been reached at a meeting.
Yes, unless the articles or bylaws require unanimity. When less than unanimous consent is used, the corporation must give prompt notice to nonconsenting shareholders.
No. The action remains effective, though a court may fashion an equitable remedy for a shareholder harmed by the notice failure.
The record date is the first date a signed consent is delivered to the corporation, or the date the board adopts a prior resolution if board action is required first.
…of a customer's securities if hypothecated securities would be commingled with the securities of another customer, absent written consent); § 240.15c2-3 (prohibiting transactions by broker-dealers in unvalidated German securities); § 240.15c2-4 (prohibiting broker-dealers from accepting any part of the sale price of a…