Stockholder Consent
A Stockholder Consent is the authorization of stockholders to carry out a specific corporate action. For example, a Stockholder Consent is used to elect or remove a member of the Board of Directors, approve a merger, and implement a Stock Incentive Plan (SIP). Typically, Stockholder Consents happen around large company decisions that can affect the stockholders' equity. Often times, a written consent will be drafted by the company and then signed by the stockholders in lieu of a physical or virtual meeting of the stockholders. Here is an example consent form from the SEC's database of public company filings.
Board Consent
A Board Consent is similar to a stockholder consent. It refers to the document that approves specific business decisions by the Board of Directors. These decisions often have to do with strategic business matters, like seeking an equity financing, restructuring the company, implementing a SIP, and adopting employee benefit plans. Board Consents are enacted once they are signed and do not require a board meeting.
Frequently Asked Questions
What is the difference between Board Minutes and Board Consents?
In the context of approving strategic business decisions, Board Minutes serve exactly the same function as a Board Consent. The Board Minutes differ from a Board Consent in that the minutes requires a board meeting to be held. The minutes are a log of what was discussed and resolved at the board meeting.
What is the difference between Stockholder Agreements and Stockholder Consents?
A Stockholders’ Agreement is a contract that details the relationships between the stockholders as well as their rights and obligations. This agreement is meant to protect the stockholders and their equity in the company. A Stockholder Agreement is an agreement between stockholders about what they are allowed to do and how they will act, whereas a Stockholder Consent authorizes the company to take certain actions.
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