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Overview

The Stockholder Consent is a written resolution by which the Company’s stockholders approve the Series Seed preferred stock financing and the amendment and restatement of the certificate of incorporation. This document is required for equity financings but not for convertible note financings.
Under Delaware law, stockholders may act by written consent in lieu of a meeting. The consent must be signed by holders of the minimum number of shares required to take the action at a meeting (typically a majority, but amendments to the certificate require approval per the certificate’s terms).

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Document Information

Source: Available in .md
Required For: Equity financings only (not convertible notes)
Delaware Law Reference: Section 228 of Delaware General Corporation Law

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Why Stockholder Approval is Required

For Series Seed equity financings, stockholder approval is necessary because:
Charter Amendment Requirements:
  • Increasing authorized shares requires stockholder vote
  • Creating new series of preferred stock requires approval
  • Setting rights and preferences requires approval
Delaware Law: Certificate amendments must be approved by:
  1. Board of Directors (declaring advisability), AND
  2. Stockholders holding required percentage of stock entitled to vote
Typical Requirement: Majority of outstanding stock, though certificate may require higher threshold
Even if not legally required, stockholder approval demonstrates:
  • Transparency to existing stockholders
  • Informed consent to dilution
  • Protection against future challenges
  • Best corporate governance practices

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Key Sections

Parties: Undersigned stockholders of the CompanyAuthority: Pursuant to Section 228 of Delaware General Corporation LawConditional Effectiveness:
  • Resolutions effective only after Board approval
  • Must not exceed 60 days from earliest consent delivery date
Purpose: This condition ensures Board acts first and stockholder consent doesn’t sit too long before closing
The 60-day limitation prevents stale consents. If closing doesn’t occur within 60 days, new consents may be needed.
WHEREAS Clause: Board has approved Restated Certificate that:
  1. Increases authorized common and preferred stock
  2. Designates shares as “Series Seed Preferred Stock”
  3. Sets forth rights, privileges, and preferences
WHEREAS Clause: Stockholders agree with Board that amendment is in company’s best interestsRESOLVED: Restated Certificate (Exhibit A) is adopted and approvedRESOLVED FURTHER: Officers authorized to:
  • Execute Restated Certificate on behalf of Company
  • Refile with Delaware Secretary of State
  • In form and manner required by Delaware law
RESOLVED FURTHER: Officers may take further actions to implement resolutions
WHEREAS Clause: Board believes it’s in best interests to issue Series Seed Preferred StockWHEREAS Clause: Stockholders have determined terms are “just and equitable and fair” and in best interests of company and stockholdersRESOLVED: Purchase Agreement (Exhibit B) is approved in all respects
  • Provides for issuance and sale of Series Seed
  • At specified purchase price per share
  • Payable by cash, debt conversion, or combination
RESOLVED FURTHER: Officers authorized to:
  • Execute and deliver Purchase Agreement
  • Execute all related agreements and documents
  • Take all actions to perform Company’s obligations
RESOLVED FURTHER: Officers may negotiate and approve:
  • Additions, modifications, amendments, or deletions
  • Execution constitutes conclusive evidence of approval
Rationale: Stockholders delegate to officers the authority to handle final negotiations and administrative changes
RESOLVED: Officers authorized to:
  • Take further actions
  • Execute documents
  • Implement foregoing resolutions
This catch-all provision ensures officers can handle unforeseen administrative requirements.

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Exhibits

The Stockholder Consent must include:
Content: Complete form of Amended and Restated Certificate of IncorporationShows:
  • Increased authorized shares
  • Series Seed designation and terms
  • Rights, preferences, and privileges
  • Voting rights and protective provisions
  • Conversion terms
  • Liquidation preferences
Status: Final form, not draft
Stockholders are approving the exact certificate attached. Material changes after stockholder approval may require new consent.
Content: Complete Series Seed Preferred Stock Investment AgreementIncludes:
  • All exhibits (definitions, terms, certificate, schedules)
  • Final negotiated terms
  • All investor rights and company obligations
Consistency: Must match Board Consent Exhibit B

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Execution Requirements

Required Signers: Depends on required vote percentageTypical Requirement:
  • Certificate amendments: Per certificate terms (often majority)
  • Other matters: Majority of outstanding stock entitled to vote
Best Practice: Obtain signatures from:
  • All Key Holders (founders)
  • Sufficient other stockholders to meet threshold
  • Over-collect to provide buffer
Common Shareholders: Usually only Common Stock stockholders need to sign (no Preferred Stock outstanding yet)
If the certificate requires class voting or supermajority, ensure you obtain the required consents from each class.
Information Required:
  • Stockholder name (printed)
  • Signature
  • Date signed
Acceptable Methods:
  • Original signature
  • Facsimile
  • PDF or other electronic reproduction
  • Electronic signature
Effect: Any reliable reproduction may be substituted for original and has same legal effect
Individual Dates: Each stockholder dates their own signatureEffective Date: Action effective when:
  • Sufficient consents received to take action, AND
  • Board has approved (due to conditional language), AND
  • Within 60 days of earliest consent date
Recording: Date of effectiveness should be noted in corporate records

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Best Practices

Before signing, stockholders should:
  1. Review Exhibits: Read complete Restated Certificate and Purchase Agreement
  2. Understand Dilution: Know how many shares being issued and dilution effect
  3. Review Terms: Understand new rights, preferences, and restrictions
  4. Consider Provisions: Review voting rights, liquidation preferences, protective provisions
  5. Assess Transaction: Determine if terms are fair and in stockholders’ interests
Stockholder Rights: Stockholders not comfortable with terms may:
  • Decline to sign (though may not prevent action if others sign)
  • Seek additional information
  • Request modifications
  • Exercise appraisal rights (if applicable)

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Common Issues and Solutions

Problem: Can’t obtain required percentage of stockholdersSolutions:
  • Identify all stockholders carefully (check stock ledger)
  • Follow up with non-responsive stockholders
  • Explain benefits of financing
  • Address concerns about dilution or terms
  • As last resort, hold special meeting and vote
Don’t close financing without required stockholder approval. Invalid issuance can be challenged and unwound.
Problem: Exhibits don’t match final negotiated termsSolutions:
  • Always attach final, executed versions
  • If terms change after consent signed, obtain new consent
  • Ensure consistency across all documents
  • Don’t reference exhibits “to be attached”
Problem: Approaching 60-day deadlineSolutions:
  • Plan ahead and start solicitation early
  • Set internal deadline before 60-day limit
  • If approaching deadline, consider obtaining new consents
  • Don’t close after 60 days without refresh
Problem: Can’t locate all stockholdersSolutions:
  • Check stock ledger for last known addresses
  • Attempt email, phone, certified mail
  • Use sufficient buffer that missing stockholders don’t prevent action
  • Consider effect of unlocated shares
  • Consult counsel on notice requirements and procedures

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Special Considerations

Not Required: Option holders generally don’t vote on certificate amendments or financing approvalsException: If options are currently exercisable and holder has exercised, resulting shares voteCommunication: Even though not required, consider informing option holders:
  • About the financing
  • Effect on their options
  • Changes to company structure
Initial Financing: Usually no preferred stockholders yetIf Preferred Exists:
  • May have class voting rights on certificate amendments
  • May have protective provisions requiring consent
  • Ensure compliance with existing preferred stock terms
  • May need separate consent from preferred holders
If existing investors hold common stock:
  • Must sign consent like other stockholders
  • Even if also investing in new round
  • Can’t waive vote for own shares

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Post-Execution Steps

Corporate Records:
  • File with minutes of stockholder proceedings
  • Maintain permanently in corporate records book
  • Note date of effectiveness
Notice to Non-Signers:
  • Provide prompt notice per certificate/bylaws
  • Typically within 10-20 days
  • Describes action taken
Secretary of State:
  • After stockholder approval, file Restated Certificate
  • With required filing fee
  • Certificate effective upon filing (or later date if specified)
After closing:
  • Update stock ledger with new Series Seed issuances
  • Note certificate amendment
  • Update capitalization table
  • Issue stock certificates (if applicable)

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Stockholder Rights and Protections

Generally Not Available: Delaware law doesn’t provide appraisal rights for:
  • Certificate amendments increasing authorized shares
  • Issuance of new securities (absent merger)
Exception: Check certificate and bylaws for contractual appraisal rights
Majority Stockholders: Owe fiduciary duty to minority
  • Must not approve self-dealing transactions
  • Must act in good faith
  • Can’t use control to harm minority
Entire Fairness: Transactions with controlling stockholders subject to entire fairness review if challenged

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Additional Resources

  • CooleyGO Resources
  • GitHub Repository
  • Delaware General Corporation Law Section 228 (stockholder written consent)
  • Delaware General Corporation Law Section 242 (certificate amendments)

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