What is Written Consent?

man in a suit remotely attending a meeting

Board meetings are essential for any business.

Directors of corporations or startups looking to pass vital motions, discuss the business’s current status, or plan for the future need semi-regular meetings to remain proactive and informed.

However, in these organizations, time-sensitive business opportunities arise on a frequent enough basis that planning a board meeting doesn’t always suffice.

Even relatively ho-hum matters such as granting options can fall by the wayside when board members operate on vastly conflicting schedules.

During the above instances – where it doesn’t make sense to implement a physical meeting – board action via written consent streamlines these actions.

The Functionality of Written Consent

More often than not, board members live in various continents, states, provinces, cities, and time zones. As such, meetings require pre-planning and a multitude of logistical considerations.

Written consent allows directors and executives to push forth an action via writing or electronic transmission.

So, in these cases, establishing consent is a matter of using either PDFs, faxes, or emails that indicate executive approvals. For online methods of written consent, executives can use e-signatures to sign off on motions.

Most corporate laws dictate that for unanimous written consent to be legitimate, all directors’ signatures must appear on the document.

When is the Best Time to Use Written Consent?

When working with a third-party that’s performing due diligence, unanimous written consents provide the optics of a board’s support for any given action.

Furthermore, elementary issues (e.g., course contracts) don’t always require full-on board meetings, particularly when scheduling conflicts arise.

Also, as noted above, some high-priority matters require immediate action. This notion applies to both emergency actions (in the case of recovering from a PR mistake) and business opportunities that won’t wait around for the next scheduled board meeting.

Possible Cons of Written Consent

If even a single board member fails to sign off on an action, it’s necessary to call a meeting for approval. Then, suddenly, something that might have seemed relatively hassle-free now necessitates the various complexities of meetings. Meaning, in most cases, the company must follow the bylaw procedures of providing prior notice, quorum, and the required vote.  

Unfortunately, written consents can’t mitigate divisive issues between board members. Any potential controversies require the in-depth discussion and thorough discourse that only a meeting can provide.

Plus, written consent is no substitute for the interpersonal connections built and established during meetings.

Of course, in specific situations, it doesn’t make sense to schedule meetings. But, even for rudimentary matters, it doesn’t hurt to have some form of discussion (even on the phone) just to ensure no signals get crossed.

Conclusion

Biannual or quarterly meetings – at the very least – are a must for any corporation or startup’s board members to remain informed and engaged. Not even something as quick and to-the-point as a written consent can offset the undeniable value of those person-to-person interactions.

Still, companies that know when and how to utilize written consent to keep operations thriving and flowing with efficiency will reap the benefits of the time-saving method.