Action by consent: Overview, definition, and example
What is action by consent?
Action by consent refers to a situation where a decision or resolution is made without the need for a formal meeting or vote. Instead, all relevant parties agree to a course of action or approve a decision through their consent, often in writing or electronically. This method is commonly used in business settings, such as board meetings or shareholder decisions, when all participants agree to a proposed action and want to expedite the decision-making process without the need for a formal meeting or discussion.
Why is action by consent important?
Action by consent is important because it allows for quicker decision-making when all parties are in agreement. It eliminates the time and effort needed for holding a meeting or voting on a resolution, which can be especially useful in time-sensitive situations. It also promotes efficiency in situations where there is unanimous agreement, as it avoids unnecessary delays. For businesses, using action by consent can streamline operations, reduce costs, and keep projects or decisions moving forward without waiting for a formal meeting or full vote.
Understanding action by consent through an example
Imagine a small business with a board of directors that needs to approve an urgent business decision, such as hiring a new employee. The board members are all available by email and agree to the decision in principle. Rather than convening a formal meeting, the company uses action by consent, with each board member providing their written approval of the hiring decision. Once all members consent, the decision is officially approved, and the new hire is brought on board without the need for a formal meeting or voting process.
In another example, shareholders in a company need to approve a change to the company’s bylaws. Instead of scheduling a physical meeting, the company sends out a proposal to all shareholders and collects their written consent. Once all shareholders agree, the bylaw change is implemented, and the company proceeds without the need for a formal shareholder meeting.
An example of an action by consent clause
Here’s how a clause about action by consent might appear in a contract or company agreement:
“Any action required or permitted to be taken by the Board of Directors under this Agreement may be taken without a meeting if all Directors provide their written consent to the proposed action. Such consent shall have the same effect as a unanimous vote of the Board.”
Conclusion
Action by consent is a useful and efficient tool for making decisions when all parties involved are in agreement. It eliminates the need for formal meetings and lengthy voting processes, allowing businesses to act quickly and stay nimble. However, it is essential that all parties consent to the proposed action for this method to be effective, ensuring that decisions are made in a transparent and collaborative manner.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.