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Overview

Board Consents are written resolutions adopted by the Company’s Board of Directors to approve the Series Seed financing. These documents authorize the issuance of securities, execution of agreements, and related corporate actions without holding a formal board meeting.
Written consents allow boards to act quickly without scheduling a meeting, which is particularly valuable for time-sensitive financing transactions. Under Delaware law, written consent must be unanimous unless the certificate of incorporation or bylaws provide otherwise.

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Document Types

Series Seed includes two Board Consent templates:
  1. Board Consent (Equity): For preferred stock financings
  2. Board Consent (Convertible Note): For convertible note financings
Source: Available in .md

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Key Sections

Purpose: Authorize amendment of certificate of incorporation to:
  1. Increase authorized common and preferred stock
  2. Designate Series Seed Preferred Stock
  3. Set forth rights, privileges, and preferences
Resolutions:
  • Declare advisability of Restated Certificate
  • Submit to stockholders for approval
  • Recommend stockholder approval
  • Authorize solicitation of stockholder consent
  • Authorize filing with Delaware Secretary of State upon stockholder approval
While the board approves and recommends the Restated Certificate, stockholder approval is required under Delaware law for amendments to the certificate of incorporation.
Determination: Board determines it’s in company’s best interests to issue Series Seed Preferred StockTerms:
  • Number of shares (up to specified maximum)
  • Purchase price per share
  • Payment methods (cash, debt conversion, or combination)
Resolutions:
  1. Approve Purchase Agreement: In form attached as Exhibit B
  2. Authorize Execution: Officers may:
    • Execute and deliver Purchase Agreement
    • Execute Management Rights Letter
    • Execute all related documents
    • Take all necessary actions to perform obligations
  3. Authorize Modifications: Officers may negotiate and approve:
    • Additions, modifications, amendments, or deletions
    • Execution constitutes conclusive evidence of approval
  4. Reserve Shares: Authorize reservation of:
    • Series Seed Preferred Stock for sale
    • Common Stock for conversion of Series Seed
    • Additional shares for anti-dilution adjustments
  5. Valid Issuance: Confirm that when consideration received:
    • Series Seed will be duly and validly issued
    • Fully-paid and nonassessable
    • Common Stock issuable on conversion properly reserved
  6. Authorize Certificates: Officers may execute and deliver stock certificates
  7. Securities Law Compliance:
    • Offering relies on exemptions from registration
    • Officers authorized to file required forms and notices
The board should ensure all resolutions are consistent with the term sheet and Purchase Agreement. Any material deviations may require renegotiation.
General Authorization: Officers authorized to:
  • Make necessary filings and applications
  • Execute and deliver required documents
  • Take actions to implement resolutions
This catch-all provision ensures officers have authority for any administrative tasks related to the financing.
Omnibus Authority: Officers may take further actions and execute documents necessary to implement all foregoing resolutionsProvides flexibility for unforeseen requirements that may arise during closing.

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Important Provisions

The board’s determination of “advisability” should be based on:
  • Company’s capital needs
  • Terms of the financing
  • Available alternatives
  • Impact on existing stockholders
  • Company’s financing objectives and financial situation
Board Duty: Directors must exercise reasonable inquiry and business judgment in determining that the financing is appropriate.
The Board Consent references:Exhibit A: Restated Certificate of Incorporation
  • Complete form of amended certificate
  • Shows exact changes to be made
Exhibit B: Purchase Agreement
  • Form of definitive investment agreement
  • Includes all exhibits and schedules

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Execution Requirements

Signatures:
  • All board members must sign (unanimous consent)
  • Each signs under their name
  • Includes date of signature
Acceptable Formats:
  • Original writing
  • Copy, facsimile, PDF, or other reliable reproduction
  • Electronic signatures permitted
Filing:
  • Must be filed with minutes of board proceedings
  • Becomes part of permanent corporate records
Effectiveness: Effective as of date of last signature (or later effective date if specified)
Source: Available in .md
Simpler Structure: Convertible notes require less extensive board action because:
  • No immediate amendment to certificate of incorporation
  • No stockholder approval required
  • Fewer related documents
Determinations:
  • Board determines it’s in best interests to raise capital via notes
  • Amount: Up to specified maximum (e.g., $500,000)
  • Terms are “just, equitable and fair” to Company
  • Board has made reasonable inquiry regarding appropriateness
Resolutions:
  1. Approve Notes: In form attached as Exhibit A
  2. Authorize Sale: Officers may sell Notes per terms
  3. Authorize Execution: Officers may:
    • Execute and deliver Notes
    • Execute related agreements and documents
    • Perform Company’s obligations
  4. Authorize Modifications: Officers may negotiate additions, modifications, amendments, or deletions
  5. Reserve Shares: Authorize reservation of:
    • Series Next Preferred Stock (for Qualified Financing conversion)
    • Common Stock (for maturity or COC conversion)
    • Common Stock for conversion of Series Next Preferred
  6. Securities Law Compliance: Offering relies on exemptions from registration
Because convertible notes can convert under multiple scenarios, the board must reserve:Maximum Shares Needed:
1. For Qualified Financing conversion:
   (Principal + Interest) / (QF Price × Discount)

2. For maturity/COC conversion:
   (Principal + Interest) / (Cap / Fully-Diluted Shares)

3. For subsequent conversion of preferred to common:
   Same as (1) or (2) on as-converted basis
The resolution reserves the “maximum number” under all scenarios to avoid later authorization issues.
Companies should reserve enough shares to cover worst-case dilution scenarios, even if unlikely. Running out of reserved shares can delay or prevent conversion.
Unlike equity financings, convertible notes typically:
  • Don’t require stockholder consent (debt issuance is board decision)
  • Don’t immediately affect stock ownership
  • Don’t amend certificate of incorporation until conversion
Exception: If notes will convert into more than 20% of outstanding stock, some states or stock exchange rules may require stockholder approval.

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Omnibus Resolutions

Both equity and note consents include omnibus resolutions:Purpose: Authorize officers to handle any matters not explicitly coveredScope:
  • Make filings and applications
  • Execute and deliver documents
  • Take acts and actions deemed necessary
  • Implement foregoing resolutions
Benefit: Avoids need for additional board consents for ministerial or administrative matters

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Best Practices

Sequence:
  1. Negotiate and finalize term sheet
  2. Prepare all definitive documents
  3. Attach exhibits to Board Consent
  4. Circulate to all directors for signature
  5. For equity: Simultaneously circulate Stockholder Consent
  6. Collect all signatures
  7. File with corporate records before closing
Don’t close the financing until all required consents are fully executed and filed. Closing without proper authorization can result in invalid securities issuance.
Before signing, directors should:
  1. Review all exhibits: Read complete Purchase Agreement or Note forms
  2. Verify terms: Ensure consistency with term sheet
  3. Check numbers: Verify share counts, valuations, prices
  4. Understand obligations: Know what rights/restrictions are being created
  5. Consider alternatives: Confirm this is best available financing
  6. Assess dilution: Understand impact on existing stockholders
Fiduciary Duty: Directors have fiduciary duty to act in company’s best interests with care and loyalty.
Missing Exhibits:
  • Always attach complete exhibits
  • Don’t reference documents “to be attached later”
  • Exhibits should be final, not drafts
Inconsistent Terms:
  • Ensure resolution terms match exhibit terms
  • Check that Purchase Agreement matches term sheet
  • Verify all numbers are consistent
Insufficient Authorization:
  • Ensure all necessary actions are covered
  • Include catch-all provisions for flexibility
  • Consider regulatory filings (e.g., Form D)
Signature Issues:
  • Obtain signatures from ALL directors (unless bylaws allow majority)
  • Ensure signatures are dated
  • Keep original in corporate records

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Special Considerations

If the financing involves board changes:Additional Resolutions Needed:
  • Resignation of departing directors (if applicable)
  • Election of new directors
  • Appointment of officers (if applicable)
  • Updates to committees
The standard Series Seed Board Consents don’t include these provisions. You’ll need to add separate resolutions or prepare a supplemental consent.
If expanding the option pool:For Equity Financing:
  • Typically handled in Restated Certificate
  • Increases authorized common stock
  • May require separate resolution specifically addressing pool
For Note Financing:
  • May need separate board action
  • Consider timing (before or after note conversion)
The resolutions authorize:
  • Initial closing on Agreement Date
  • Additional closings within 90 days (equity) or as specified (notes)
  • Officers to accept investments without additional board approval
Flexibility: Allows rolling close over period of time without reconvening board for each new investor

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California Securities Law Notice

If selling to California residents, the consent should note that the sale may need qualification with the California Commissioner of Corporations or an exemption must be available. However, the standard Series Seed documents rely on federal preemption under the National Securities Markets Improvement Act.

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Filing and Retention

Filing Requirements:
  • File with minutes of board proceedings
  • Maintain in corporate records book
  • Keep permanently as part of company history
Copies:
  • Provide copy to company counsel
  • May need to provide to investors
  • Include in closing binder
Access:
  • Available for inspection by stockholders (per state law)
  • May be requested in due diligence for future financings

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