Stockholder Ratifying Consent Review Checklist

Every item below reads a draft stockholder ratifying consent against DGCL § 204(c)–(d). This is the stockholder-side half of a § 204 cure: where the defective corporate act being ratified would itself have required a stockholder vote — or resulted from a § 203 failure — the board's ratification must be submitted to stockholders, ordinarily by written consent under § 228 for a closely held company. The document is deliberately narrow; the substantive recitals (which acts, which dates, which failure of authorization) live in the Board Ratifying Consent this document approves. But two of its rules are easy to get wrong and each independently sinks the cure: the voting denominator is current law, not the original cap table, and the very putative shares being cured do not vote on their own ratification. For the background and the sequencing of the two consents, see the Delaware corporate-governance records practice guide. Whether stockholder approval is required at all for a given act remains a judgment for counsel.

0 of 2 checked

Approving the board's ratification

1.1Approves the same specifically identified act the board ratified

Confirm the consent approves the ratification of the specifically identified defective act(s) the board already approved, referencing or attaching the board's § 204(b) ratifying resolutions. DGCL § 204(c) frames the stockholder approval as an approval of a defined act to be submitted under subsection (d) , and § 204(d)(3) requires the accompanying notice to carry those resolutions — so the stockholder consent must approve the same named acts, not a free-standing sweep. “Each defective corporate act ratified pursuant to paragraph (b)(1) of this section shall be submitted to stockholders for approval as provided in subsection (d) of this section”

Required (MUST)

1.2Current-law quorum and voting denominator, not the original cap table

Confirm the approval is computed under the quorum and voting requirements applicable to the type of act at the time of the ratification — subject to any larger threshold the charter, bylaws, or a plan or agreement required as of the defective act — not the historic cap table. DGCL § 204(d)(4) fixes the denominator to current law ; taken by written consent, the consent must be signed by holders of at least the minimum votes needed to approve the ratification at a meeting . “the quorum and voting requirements applicable to the type of defective corporate act proposed to be ratified at the time of the approval of the ratification”

Required (MUST)

Sources for this section

Primary law

A.1 8 Del. C. § 204(c)

A ratified defective act must be submitted to stockholders for approval under subsection (d) where the act would have required a stockholder vote — so the stockholder consent approves a defined, board-identified act.

Each defective corporate act ratified pursuant to paragraph (b)(1) of this section shall be submitted to stockholders for approval as provided in subsection (d) of this section

See 8 Del. C. § 204(c).

Primary law

A.2 8 Del. C. § 204(d)(4)

The stockholder quorum and voting requirements are those applicable to the type of act at the time of the approval of the ratification — the current-law denominator, subject to any larger historic threshold.

the quorum and voting requirements applicable to the type of defective corporate act proposed to be ratified at the time of the approval of the ratification

See 8 Del. C. § 204(d)(4).

Primary law

A.3 8 Del. C. § 228(a)

Stockholders may act by written consent signed by holders of at least the minimum number of votes needed to authorize the action at a meeting — the mechanism for a closely held company's ratifying consent.

may be taken without a meeting, without prior notice and without a vote, if a consent or consents, setting forth the action so taken, shall be signed by the holders of outstanding stock having 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

See 8 Del. C. § 228(a).

0 of 1 checked

The putative-stock voting trap

2.1Putative shares being cured excluded from the vote and quorum

Confirm the approving percentage is computed without the putative shares being cured. DGCL § 204(d)(5) provides that putative stock as of the board's adoption of the ratifying resolutions is neither entitled to vote nor counted for quorum on the ratification — the shares whose validity is in question cannot supply the approval that would validate them. Counting them is the single most common error in a § 204 stockholder consent and produces an invalid approval. “shall neither be entitled to vote nor counted for quorum purposes in any vote to ratify any defective corporate act.”

Prohibited (MUST NOT)

Sources for this section

Primary law

B.1 8 Del. C. § 204(d)(5)

Putative stock as of the board's adoption of the ratifying resolutions is neither entitled to vote nor counted for quorum in the vote to ratify — the shares being cured cannot vote on their own cure.

shall neither be entitled to vote nor counted for quorum purposes in any vote to ratify any defective corporate act.

See 8 Del. C. § 204(d)(5).

0 of 3 checked

Notice and related filings

3.1§ 204(d)/§ 228 notice given, including past-time and nonvoting holders

Confirm the § 204(d) notice requirement is met — at least 20 days' notice of the meeting to each holder of valid and putative stock (voting and nonvoting, and including holders as of the time of the defective act) , or, for a written consent, the corresponding notice with the ratifying resolutions and the 120-day-challenge statement. The reach is the trap: notice extends beyond the current voting cap table, so a current stockholders only distribution is itself a defect. A less-than-unanimous written consent also triggers § 228(e) notice to non-consenting holders . “due notice of the time, place, if any, and purpose of the meeting shall be given at least 20 days before the date of the meeting to each holder of valid stock and putative stock, whether voting or nonvoting”

Required (MUST)

3.3Special vote applied for a director-election or § 203-failure ratification

Where the ratification is of a director election or arises from a § 203 failure, confirm the consent applies the special voting rule § 204(d)(4) supplies: a director-election ratification requires the affirmative vote of a majority of shares present and entitled to vote on that election, and a § 203-failure ratification requires the vote set out in § 203(a)(3) regardless of whether it would otherwise have been required. These override the ordinary denominator and are easy to miss when drafting from a generic majority-approval template.

Recommended (SHOULD)

Sources for this section

Primary law

C.1 8 Del. C. § 204(d)(1)

At least 20 days' notice of the ratification meeting must go to each holder of valid and putative stock, whether voting or nonvoting — the notice reaches beyond the current voting cap table.

due notice of the time, place, if any, and purpose of the meeting shall be given at least 20 days before the date of the meeting to each holder of valid stock and putative stock, whether voting or nonvoting

See 8 Del. C. § 204(d)(1).

Primary law

C.2 8 Del. C. § 228(e)

When stockholders act by less-than-unanimous written consent, prompt notice must be given to those who did not consent — an independent notice obligation on a signed ratifying consent.

prompt notice of the taking of the action by consent shall be given to those stockholders or members as of the record date for the action by consent who have not consented

See 8 Del. C. § 228(e).

Primary law

C.3 8 Del. C. § 204(e)

If the defective act would have required a certificate filed under § 103, the corporation must file a certificate of validation — a related charter amendment ratified with the act needs stockholder approval too.

in lieu of filing the certificate otherwise required by this title, the corporation shall file a certificate of validation with respect to such defective corporate act

See 8 Del. C. § 204(e)(1).