It's safe to assume all corporations make important decisions all the time. Sometimes these are everyday items, but the more significant resolutions are made in board meetings.
However, sometimes it may not be possible to get all directors together in one room. Not to mention it may not even be necessary. That's where a Directors' Consent in Lieu of Meeting document comes in handy. It can be used to expedite a resolution everyone agrees with or to consent to it.
A Directors' Consent in Lieu of Meeting is a written consent for a corporation's specific action without having to arrange a board meeting. If they have previously agreed on passing a particular resolution, then using a written consent is a simple shortcut serving this purpose.
Formal board meetings are often necessary, but not always. If it's not, you can use a Directors' Consent in Lieu of Meeting to move things along.
Depending on your state, a Directors' Consent in Lieu of Meeting may also be known as:
Consent to Action Without a Meeting
Consent of Directors
Consent of Directors in Lieu of Meeting
Written Consent in Lieu of Meeting
Unanimous Written Consent of Directors
A corporation needs a Directors' Consent in Lieu of Meeting at one time or another. In some cases, they use written consent more frequently than holding in-person board meetings. Even the most straightforward and most agreeable resolutions require the unanimous consent of the board. The directors can sign consent and send it by courier or electronic transmission.
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The Directors' Consent in Lieu of Meeting form is too necessary to get wrong. That's why it's best to have a ready template to fill in some of your essential information.
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To create your document, please provide:
Date: Date when the document is created
Governing law: Or jurisdiction, the state where the corporation was incorporated
Details of the corporation: The legal name of the corporation, the state where it was incorporated, and the official address
List of directors: All the members of the board of directors listed and identified by name and status
The extent of consent: An explanation of what the consent entails and for which purpose it is used for
Signatures: Signatures of all the directors and the company's secretary
In lieu: In place of
Consent: An agreement to take a prescribed action in a corporation
Board of Directors: A group of people appointed to supervise a corporation and act on behalf of the shareholders
Shareholders: People owning shares in the company
Meeting Minutes: A record of everything happening at a corporation's formal meeting
End of fiscal year: Time of year when a corporation compiles its annual financial report and budgeting
Signing Authority: A person authorized to conduct business in the name of a corporation
Corporate Resolution: A decision made in a corporation's formal meeting such as the board meeting
The most critical aspect of a Directors' Consent in Lieu of Meeting is the language's unambiguity. It must be clear what the directors have agreed to and for what they are giving the consent. After the document is signed by every board member and the company's secretary, it can be filed away as notarization is not required.
A Directors' Consent in Lieu of Meeting is part of a corporation's records. Keep all these documents organized and retrievable in the minute book. Although rare, a corporation may need to present its resolutions to a third-party such as the bank, a court, the IRS, and more.
By nature, extra scrutiny might come with such a decision. To not leave any room for interpretation, it would be best to mimic the language of the company’s bylaws. In doing so, the consent is less likely to be held as ambiguous.
Even though written consent can expedite matters, especially in a time crunch, it's not the best practice to solely rely on it. Failure to hold board meetings could lead to management problems for the inability to build rapport and discuss the items on a meeting’s agenda more thoroughly. It is why corporations, and not just public companies, insist on having at least biannual meetings of the board of directors and shareholders.
The answer is yes, as all of the board members have to approve a resolution in person or in writing. As such, this is one of the prerequisites for the document to be valid. All of the directors must be contacted directly and they each have to sign the consent.
Going the way of a Directors’ Consent in Lieu of Meeting document can be a great shortcut when the directors have to make quick decisions. But if there are any reservations, even when it’s only on the part of one director, it could be a waste of time more than anything. If there's uncertainty, it's always best to schedule a board meeting and take it from there.
Some states authorize the sending of written consent in email, but this is something that you ought to verify before sending. However, just because an action might be acceptable doesn't mean that it's the most prudent practice. Both personal and business email accounts are at risk of hacking and a breach could jeopardize the company.
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