This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
A common post-seed pattern looks like this: two founders, a seed fund with a board seat, and a stack of SAFEs behind them. One founder leaves. The company repurchases the departing founder’s unvested shares, and the remaining founder wants to put a new director in the empty seat. A board consent and a stockholder consent get drafted, and then the question lands: does the fund have to sign the stockholder consent, or can the remaining founder sign it alone and send the fund a notice afterward?
The answer usually surprises founders. The fund’s signature is not needed on the stockholder consent. It is needed, or rather the signature of the fund’s board designee is needed, on the board consent. Almost everyone expects the reverse. Here is why it works this way, and the handful of places where the mechanics actually bite.
Two consents, two very different rules
Delaware lets both boards and stockholders act on paper instead of in a room, but the rules are inverted.
A board acting by written consent needs every director. Section 141(f) of the Delaware General Corporation Law permits board action without a meeting only if all members of the board consent in writing or by electronic transmission. There is no such thing as a majority written consent of directors. If one director won’t sign, the alternative is a meeting, where a majority of the directors present at a quorum carries the day. On a two-person board that is no alternative at all, because quorum is both of them.
Stockholders acting by written consent need only the votes the action would have needed at a meeting. lets holders of “not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted” sign, without a meeting, without prior notice and without a vote. In practice that means holders of a majority of the outstanding voting power. Everyone else finds out afterward.
Picture a typical post-seed cap table: two founders at 45% each and a fund at 10%, plus the SAFEs. After one founder’s shares are repurchased, the remaining founder holds a little over 80% of what is left. That founder alone can execute a valid stockholder consent. The fund’s signature is legally superfluous. The SAFE holders don’t sign at all, because SAFE holders aren’t stockholders; they hold a contract right to become stockholders later.
Meanwhile the board consent, which founders treat as the easy internal step, is the one that needs the investor’s cooperation, because the investor’s designee is a director and Section 141(f) needs all of them.
You may not need the board consent at all
This is the part I enjoy explaining. Stockholders elect directors. It is the most basic stockholder power in the statute, and it does not require board approval. If the task is filling a vacancy or a newly created seat, the stockholders can do it directly by written consent, and the board consent becomes optional paper.
Founders sometimes point to the bylaw that says vacancies “may be filled by a majority of the directors then in office.” Read it again: may. That language, lifted from Section 223, gives the board a concurrent power to fill vacancies. It does not take the power away from stockholders unless the charter or bylaws make the board’s power exclusive, and most startup bylaws don’t. Delaware courts have treated the stockholders’ power to fill vacancies as inherent for a long time; Campbell v. Loew’s, Inc. (Del. Ch. 1957) is the classic cite.
Bylaws can’t cut back the stockholder consent right either. The Delaware Supreme Court struck bylaws that tried to slow-walk Section 228 consents in Datapoint Corp. v. Plaza Securities Co. (Del. 1985) and again in Allen v. Prime Computer, Inc. (Del. 1988). Only the certificate of incorporation can restrict action by written consent, so the charter is the document to check, and most private-company charters leave the right intact.
If the investor’s designee is happy to sign, by all means run the board consent too. A short board resolution acknowledging the election and updating the officer slate is fine. But if chasing that signature is what is holding things up, drop it. One stockholder consent, one notice, done.
Where the investor’s rights actually live
None of this means the investor can be ignored. It means the right document has to be read. Startup investors get their board protections through voting agreements, side letters and charter provisions, not through the mechanics of Section 228.
Two things to check. First, the protective provisions, meaning the list of things the company can’t do without investor consent. These usually cover new debt, repurchases, dividends, affiliate transactions and the like. Board composition is rarely on that list. Second, and more important, the board composition covenant itself: “the Board shall consist of three directors, one designated by the Investor and two designated by the holders of a majority of the Common Stock,” or words to that effect. That clause does two things. It says who picks the replacement for a departed common director (the common majority), and it fixes the size of the board.
The second point is the one that trips people up. Filling a departed founder’s seat with the common majority’s designee is performance of the covenant. Adding a fourth seat is a breach of it. Same new director, same signature block, completely different answer depending on whether the recital says “to fill the vacancy” or “to increase the size of the board.”
One more thing on the protective-provision list. If the departing founder’s shares left through a company repurchase, check whether repurchases needed investor consent. Most side letters carve out repurchases at cost under a restricted stock agreement, but the carve-out has to actually fit the exit that happened.
The record date trap
Section 228 consents have a record date, and if the board hasn’t fixed one, Section 213(b) makes it the day the first signed consent is delivered to the company. That is usually harmless. It becomes a live issue in exactly the fact pattern above: a departing co-founder whose shares are being repurchased.
If the co-founder’s shares are still on the stock ledger on the day the consent is delivered, they count in the denominator, and the remaining founder’s 45% is not a majority. The consent fails. Sequence matters: paper the repurchase, update the ledger, then sign and deliver the consent. “Deliver” sounds formal, but for a founder-CEO who keeps the minute book it means printing the signed consent and putting it in the book, since Section 228(d) counts delivery to the officer who has custody of the stockholder records. That act fixes the record date, and it should happen after the cap table reflects reality.
A related trap: giving up shares does not end a directorship. A director leaves the board by resigning in writing or by electronic transmission under Section 141(b), or by being removed. If the departed co-founder never sent a resignation, that person is still a director, that signature is still needed on any board consent, and the “vacancy” being filled doesn’t exist yet. The fix is easy once you see it. The same stockholder consent can remove the director (Section 141(k) lets holders of a majority of the shares entitled to vote remove directors with or without cause) and then elect the replacement. Delaware has a wrinkle in Section 211(b) about using a non-unanimous consent in place of the annual election of the full board; filling a single vacancy, or removing and replacing one director, is a different action and doesn’t run into it. But someone has to know to do it.
The notice that isn’t a vote
Once a less-than-unanimous stockholder consent takes effect, Section 228(e) requires prompt notice to the stockholders who didn’t sign. Founders often read this as the step where the investor gets to weigh in. It isn’t. The action is already effective. The notice tells non-signing holders what happened, and it doesn’t invite a response.
The notice should identify the action taken, the effective date, the fact that it was taken by written consent of holders of the requisite voting power, and that no stockholder action is requested. Email is fine if the bylaws permit electronic notice and the holder hasn’t opted out, and most modern bylaws do. It goes to every non-consenting record holder, not just the institutional investor: any employee or advisor who has actually been issued shares gets one too. Options and unissued pool shares don’t count. The statute says “prompt” and doesn’t define it; treat it as days, not months, and treat it as part of closing the action rather than an afterthought.
A note for Florida founders
Most venture-backed Florida startups are Delaware corporations, which is why the DGCL rather than Chapter 607 controls this analysis. A Florida corporation runs a similar play under the Florida Business Corporation Act: Section 607.0704 allows shareholder action by written consent of the holders of the minimum votes needed at a meeting, and Section 607.0821 requires unanimity for director action without a meeting. Florida also puts a hard deadline on the equivalent notice, ten days after the consent is obtained, where Delaware says only “prompt.”
The short version
When a director leaves and a new one is coming on: read the board composition covenant before anything else. Decide whether the action fills a seat or expands the board. Confirm the departed director actually resigned in writing. Get the cap table current before delivering the stockholder consent. Let the common majority elect the new director by written consent. Send the Section 228(e) notice promptly afterward. Run a board consent only if every director’s signature is in hand.
The investor’s signature ends up on the paper founders didn’t expect and not on the paper they did. That isn’t a loophole. It is the statute working the way it was designed to: unanimity for the small deliberative body, majority for the owners.
If you are adding or replacing a director at a venture-backed company and want the consents and notice done right, feel free to reach out to our firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
