While your financing agreements might have other requirements, below is a nonexhaustive list of the types of corporate decisions that typically require board and/or stockholder approval:
|Board Approval Is Required to:||Stockholder Approval Is Required to:|
Your financing agreements might also set forth that the director(s) appointed by your investors must approve certain other corporate actions. In general, we recommend informing the board of significant actions even if formal approval is not required. Directors will appreciate that you are keeping them apprised. This can prevent hard feelings later if they are surprised by something serious.
The precise answer to whether board or stockholder approval is required often turns on the corporate charter and other investment documents. We recommend asking us whether a particular item needs approval. We frequently get this question!
Also, board and stockholder actions must be evidenced either by (1) resolutions adopted by written consent or (2) written minutes describing the vote for such actions at a duly noticed meeting. Board actions taken by written consent are required to be unanimous and do not become effective until all directors have executed documentation approving such actions. Stockholder actions need not be unanimous, but additional notice must be promptly given to any stockholders who did not affirmatively approve such actions.
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