Introduction
Fidelity Private Shares℠ can make it easy to communicate with your company's Board of Directors and Stockholders. The platform generates resolutions as part of its workflows and requests Board and Stockholder involvement when you are ready. From Written Consents to Board Meeting Minutes to Stockholder Communications, we offer you the tools to manage the approval process and securely store your governance records, all in one place.
Approval Methods
Certain actions in a corporation require approval by the Board of Directors and/or Stockholders. The requested action is put in the form of a Resolution. Resolutions can be approved in two ways:
- Resolutions can be voted on during a meeting of the Board of Directors. The outcome is recorded in the Meeting Minutes. Meeting Minutes are the official record of the decisions made in the meeting and are ratified by the Board during their next meeting.
- Outside of a meeting, Resolutions are added to a Written Consent for approval. Approval of a Written Consent is obtained by collecting signatures from the voting parties.
How to Solicit Approval
The platform automatically generates Resolutions for workflows that need Board and/or Stockholder approval, starting the process right in the workflow. When you reach the approval step, the workflow will offer you a choice of when to request approval:
- Create Consent and Solicit Approval in this Workflow: With this option, a Consent containing the Resolution pertaining to the workflow is immediately generated, and the Consent Approval process begins.
- Rely on Previously Executed Board Approval Document: This option will allow you to select a previously executed approval document to approve this specific action. You will be able to select from existing documents in your data room or upload the document.
- Use Other Method of Approval: The Resolution created during the workflow will be held in a “pending” state. Approving the Resolution happens using the Create Board/Stockholder Consent workflows or, in the case of the Board, the Meeting Minutes workflow. Your current process will be blocked until the resolutions are approved.
In some workflows, there may be the additional option to Waive Stockholder Approval. Consider consulting this choice with your counsel.
Once the required Resolutions are approved using one of these methods, the associated workflow will be unblocked and can move forward. For instance, if you were granting equity to an employee under a Stock Incentive Plan, the equity award will be granted to the employee after it is approved by the Board, through a Consent or Meeting Minutes approval.
Written Consents
The consent workflows help you step-by-step through the process of creating a Consent and soliciting approvals from Board Members and/or Stockholders.
If you’ve chosen the Create Consent and Solicit Approval Now option, the workflow creates a Consent containing all of the required resolutions for the current workflow. The Create Board Consent and Create Shareholder Consent workflows allow you to bundle outstanding Resolutions generated in previously into a single Consent—and add custom resolutions—at the beginning of the workflow.
Requesting Consent Approval
- Compose Email: Set up the email that will accompany the request for signature. The workflow offers default text for your convenience, but you can customize the text to fit your needs. You will have an opportunity to review the materials before the platform sends the email to the board members and selected stockholders, including a link to sign the consent.
- Checkpoint: The Checkpoint gives you one last opportunity to review the full Consent, and the Resolutions contained therein, before it is sent to the Board Members and/or selected Stockholders, as appropriate. Continue when you are ready to proceed, and the platform will send the request to the appropriate parties. (See Selecting Stockholders for Approval below for more information about Stockholder voting thresholds and protective provisions.)
- Monitor Signatures: During any workflow that requires signatures, the platform will display a list of the signatories and the status of their signatures. You can view this list at any time in your Workflows list. Next to each name that hasn’t signed there is a Reminder button. Using this will send the selected signatory a message to let them know they have an outstanding item to address, including a link to the consent.
Once all of the signatures are received, the appropriate parties will be notified, and the workflow will continue to the next step. The final approved Board and Stockholder Consents are available through the Board & Stockholder panel on the Company Workspace page. To view them, click the dropdown button at the bottom of the panel and select Past Stockholder Actions or Past Board Actions. All executed consent documents can be found in your Data Room as well.
Selecting Stockholders for Approval
The process for requesting Stockholder approval is similar to that of Board approval. The distinction is that while a Board Consent is voted on by all members of the Board, the same is not true for Stockholder Consents. Also, a stockholder vote may be subject to protective provisions.
- Select Stockholders: not every vote requires the participation of all of your Stockholders—just enough to meet your approval threshold. Select only the names of the Stockholders from whom you want to solicit a signature. A green bar indicates that you have selected the proper number of stockholders to meet the minimum number of votes needed.
- Protective Provisions: the workflow will check to see if a given Resolution requires additional Stockholder votes to satisfy any applicable protective provisions. The workflow will guide you through selecting the stockholders necessary to meet the protective provision.
After the process of selecting the Stockholders is complete, the workflow continues same as the Board Consent Approval.
Meeting Minutes
Board Resolutions can also be approved through the Meeting Minutes workflow. The Meeting Minutes workflow captures the attendance, discussion notes, and voting record for Board Resolutions featured in the meeting.
What to expect during the workflow:
- Approve previously generated resolutions
- Enter and approve any new resolutions
- Prompt the company Secretary to review the Meeting Minutes for accuracy
- Generate a board resolution to approve the minutes
- Solicit board approval of this resolution
- Request the Secretary's signature to finalize the Meeting Minutes
Note - the Hold for Secretary Approval option (which can be selected during the first step of the workflow) delays the workflow's release until after all of the following has occurred: (a) the meeting notes are entered; (b) the votes for all resolutions are recorded; and, (c) the meeting Secretary has approved the minutes.
Stockholder Communications
Stockholders who do not participate in an approval must receive a Stockholder Communication promptly after the vote in order to satisfy Delaware General Corporate Law Section 228. You can prepare a 228 Notice using the Stockholder Communication workflow. During the workflow, you can select which Consents to include in the communication. You're also given the option to include a custom cover letter. The workflow prepares the Communication and distributes it via email, to all affected Stockholders.
Board and Stockholder Information
Members of the Board of Directors can view Minutes from prior meetings and see the list of pending and approved Board Consents on the Board & Stockholders panel of their My Workspace page.
On the Stockholders panel on the My Workspace page, Stockholders can view Consents awaiting their signature, and a list of the Consents and Communications they have received.
Company executives can see an overview of open Resolutions and Active Consents for both the Board of Directors and Stockholders on the Board and Stockholder Relations panel via the Company Workspace. All final documents related to the Board and Stockholder actions are stored in the Data Room.
Additional Resources
Consents for Board or Stockholders
Screenshots are for illustrative purposes only.
Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.
Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult and attorney or tax professional regarding your specific situation.
1094970.2.0
© 2024 FMR LLC. All rights reserved.