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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

DGCL. Sec. 228 - Action by written consent

Headnote

Stockholders may act by providing their written consent rather than at a meeting. Taking action by written consent rather than at a formal meeting may be preferrable in corporations, like start-up companies, where the number of stockholders is relatively small and easily identifiable.  Any action that can be taken at a meeting of the stockholders can also be accomplished by written consent of the majority of the outstanding shares.  

This default right to act by written consent can be stripped from stockholders.  It is not uncommon for larger, publicly-traded corporations to include a prohibition against acting by written consent in the corporation's certificate of incorporation. By requiring stockholders to act only at a meeting – the time and place of which is controlled by the board of directors – managers of the corporation make it difficult for stockholder activists or for potential hostile acquirers of the corporation to organize stockholders against the incumbent board of directors and managers.