What Is a Unanimous Consent Board Resolution and How To Prepare It? -

What Is a Unanimous Consent Board Resolution and How To Prepare It?

What Is a Unanimous Consent Board Resolution and How To Prepare It

A unanimous consent board resolution allows boards to take decisions on vitally important matters at any time, rather than simply waiting for the next board meeting. This article explains what a unanimous consent board resolution, also known as ‘unanimous written consent’ or simply ‘unanimous consent’, is, when it is used and how to prepare it.

What Does A Unanimous Consent Board Resolution Mean?

Unanimous consent board resolution is a form of voting used by boards to take decisions on certain matters. It involves all directors voting the same way to pass the resolution and can occur during the board meeting, but can also happen between meetings. It can save the need for a formal vote, with the chair passing the motion if no one objects. 

The resolution comes in the form of a written statement that all members must agree to in order to pass it. Each director on the executive board should read and digest the resolution before making up their mind and agreeing or disagreeing with it. 

When an urgent issue comes up, a unanimous consent resolution can be used without calling a meeting. Such a resolution can be employed for a range of routine matters — from appointing a new director to the issuance of new shares of stock. 

When is a Unanimous Consent Form Used?

As long as the local applicable laws (such as the Companies Act in the UK) and the company’s bylaws allow a unanimous consent for that particular issue, you can use it. 

If you need to make the resolution without calling a meeting, you have to create a unanimous consent form  — a document that features the full proposed resolution. Distribute this document with the board papers and notice of the meeting ahead of the next board meeting. Then contact the directors using mail, email or a board portal and send them the document. 

This is a template for a unanimous consent form that you could use to form your own documents. 

The directors must all sign the document in the meeting. If you are using a unanimous consent form between meetings, they should sign their counterpart (copy) and post or email it back. If you are using board software, they can add a digital signature on their device which will instantly update in the cloud. This is a great way to save time because it is much more convenient than the traditional way of collecting signatures on paper.

How to Write a Unanimous Consent Board Meeting Resolution

  1. At the top of the unanimous consent form, you should make it clear that this is the intention of the document. You can use language such as “Action by Unanimous Consent of the Board of Directors of [name of corporation]”. If you make the resolution outside of a board meeting, you might want to add “in lieu of a meeting of the board of directors.”
  2. Introduce the resolution with a sentence to the effect that the undersigned board of directors will make a resolution on behalf of the corporation and in the best interests of the company. 
  3. Include a sentence that states that the following persons (the directors) unanimously agree to the adoption of the following resolutions.
  4. Describe the motion that you wish to seek consent for. This should be detailed so the directors know exactly what they are signing. 
  5. State that the directors have the authority to make such a decision.
  6. If you make this resolution outside of the meeting, state that the agreement may be made over separate documents. If you deal with it in a meeting or through a board portal, where everyone can collaborate on the same document, you do not need to add this. 
  7. Include the signatures of the directors, the corporate seal and the date you made the resolution. 

Unanimous Consent Resolution Examples

Here are some examples of real unanimous consent resolutions:

Meetings vs. Written Consents

There are many different reasons for choosing written consent over waiting until the next board meeting for taking a unanimous consent resolution. Here are the reasons to seek written consents:

  • Speed of delivery. If the resolution is time-specific, there is just not enough time to call a full meeting. Therefore a written resolution, when allowed by the law and the articles of association, is the best solution. 
  • Convenience. It could be that directors cannot spare the time to attend a meeting. They may live too far away to change plans or might be in a different time zone, making even an online meeting impractical. You don’t have to command a quorum at one particular time. Being able to respond to a resolution in their own time is convenient. 
  • Audit trail. If you use a board portal for your written unanimous consent resolutions, you have all the signatures in one place, time-stamped and saved in the cloud for easy auditing. 
  • Money-saving. It is much less expensive to pass resolutions in this manner than by paying for room hire, accommodation, travel and catering for a full meeting. 

Here are the reasons for passing a unanimous consent resolution at a meeting: 

  • Division. Written consent only works where there is clear agreement amongst the directors. For any topic where there is potential division, a meeting means that the board can discuss the resolution more easily to help come to a unanimous decision. If anyone declines to agree to a written resolution, you must call a meeting anyway. 
  • Management involvement. With a meeting, management can show their support to the decision, which is noted in the minutes. This shows a united front that is not evidenced with a written consent. 
  • Flexibility. Written consent is only used for unanimous decisions. Any other business that requires a simple majority cannot be voted on in this way. This means that there is always room for a decision-making meeting. 

How to Implement a Written Consent

As soon as a written consent is granted by the final director of the corporation signing the form, it becomes effective. You should keep the responses with directors’ signatures, as well as the wording of the resolution on file for at least the period of time specified in your country’s laws and in the company’s constitution. However, it is advisable to keep them permanently as a record of why the officers of the corporation made the decisions they did.

FAQ

Who should sign a Unanimous Consent Agreement?

All eligible directors must sign the unanimous consent agreement to show that they are all in agreement with the resolution. The chair and board secretary should also sign the agreement. 

Does a board resolution need to be signed by all directors?

All eligible directors of private companies must sign the resolution. There may be other directors who are not eligible. This could be because they have a declared conflict of interest or for some other reason.

How do you record resolution in minutes?

You should record the wording of the resolution in the minutes, as well as the document featuring the signatures of the company’s directors to show the decision was unanimous. 

Conclusion

A unanimous consent board resolution is a quick and easy way of working through the board’s business. For issues where the entirety of the board is in agreement can be dealt with in this manner without the need for debate and a formal vote. When the board must make a decision between board meetings, this form of resolution saves the hassle and expense of gathering members in one place. 

Since a unanimous consent board resolution requires the signatures of all members, it may still be a lengthy process, involving a lot of paper. A board portal such as iBabs makes the process easy and auditable. You can request a demo of iBabs here.

References and Further Reading