Plowing Through The Ambiguities Of California’s Record Date Statute

Corporations Code Section 603(a) provides the basic authority for shareholders of California corporations to take action by written consent (unless the articles provide otherwise). Section 701 establishes the rules for determining the record date for corporate actions involving shareholders, including shareholder action by written consent. Although the mechanics of establishing a record date may seem so mundane as to warrant no special attention, the California statute is rife with ambiguity.

When the Board Fixes the Record Date

Under Section 701(a), the board of directors may fix a record date, subject to two limitations. First, the board must fix the record date in advance. Second, the record date must not be more than 60 days prior to the “action”. Delaware, in contrast, provides that the record date for consents be not more than 10 days after the date upon which the board’s resolution fixing the record date is adopted. DGCL § 213(b).

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