Shareholder Action by Less than Unanimous Consent Clause
(Articles of Incorporation) (MI Corporation)

Summary

This Shareholder Action by Less than Unanimous Consent Clause (Articles of Incorporation) (MI Corporation) may be included in a Michigan corporation’s articles of incorporation to provide for shareholder action by less than unanimous written consent. This clause contains practical guidance and drafting notes. State corporation statutes empower shareholders to vote, at annual and special shareholder meetings, on matters put before them by the corporation’s board of directors or fellow shareholders. The requirements for each type of meeting are set forth in the articles of incorporation (or the bylaws, or both). Most states have enacted statutes authorizing shareholders to alternatively submit written consents in lieu of a meeting. Written consents are counted as “yes” votes in favor of the proposed action and abstentions are interpreted as constructive disapprovals (i.e., “no” votes). In return for this permissiveness, the corporate laws of most states generally require unanimous written consent to a proposed action. However, some states allow shareholder action by written consent at the same voting standard that would otherwise apply—usually an absolute majority—under the articles of incorporation (or the bylaws), as if a shareholder meeting were held. Other states provide mixed thresholds for written consents—unanimous for certain purposes and an absolute majority (or another standard) for others. For further information on Michigan corporations, see Formation and Qualification (MI Corporation), Entity Maintenance and Amendments (MI Corporation), Management and Indemnification (MI Corporation), and Dissolution (MI Corporation).