The Arcana Of Dating Stockholder Consents

by Allen Matkins
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“And whispering ‘I will ne’er consent’—consented”

Long ago, I had the temerity to write about Delaware’s statutes concerning stockholder consents, Delaware’s Inadequate Protection of Shareholders When Action Is Taken by Consent, 11 Bus. Law. Update 4 (1991).  The law of stockholder consents in Delaware in my view continues to be a complicated subject, as evidenced by these thorny questions answered by Delaware Vice Chancellor John W. Noble’s in Ravenswood Inv. Co., L.P. v. Winmill, 2013 Del. Ch. LEXIS 291 (Del. Ch. Nov. 27, 2013):

  • Does use of “as of” in dating a consent violate Section 228 of the DGCL?  The statute requires that “Every written consent shall bear the date of signature of each stockholder . . .”.  The plaintiff argued that “as of” is frequently used to denote the effective date of an instrument, not the actual date of signature.  In this case, the argument didn’t fly because it was undisputed that the sole stockholder signing the consent actually signed the consent on the indicated “as of” date.  Note that the Vice Chancellor didn’t rule that the use of “as of” would work in every case – only that its use wouldn’t in all cases result in the invalidation of a stockholder consent.
  • Does the use of a single date on a consent work for multiple signatures?  In this case, the consent was signed by the sole voting stockholder (who was also a director) and the other directors, but there was only one date.  V.C. Noble concluded:

    The Court acknowledges that having a separate date for each shareholder signatory should be the practice, debates like this should not be necessary, and minor changes in the facts could have altered the outcome.  But, where there is no debate that the statutory requirement was satisfied and where there is no uncertainty as to compliance with the statutory mandate, a strained reading of the Consent serves no apparent purpose and in no way would advance the legislative purposes.

Note that the facts of this case are somewhat atypical and that the court notes that minor changes in fact could have altered the outcome.

But why this preternatural fixation with dates?  In Delaware, the date of a consent is important because Section 228(c) provides that “no written consent shall be effective  . . . unless, within 60 days of the earliest dated consent . . .” a sufficient number of consents are delivered.  Thus, it’s important to know the dates of consents in order to determine their effectiveness.  However, as I pointed out two decades ago: “This emphasis on the date of the consent in section 228 contrasts markedly with the focus on the date of delivery in section 213? (emphasis in the original).

California, as it often does, marches to the beat of a different drummer.  Corporations Code Section 603 includes no express requirement that a shareholder consent be signed, let alone dated.  Instead, the statute requires a consent in writing be “provided”.

Happy Santa Lucia Day!

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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