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How a ‘No Objection’ Vote Could Affect Your Business

by gbaf mag

A Consent Resolution to Proceed Without a Board Meeting, or a shareholder’s consent to action without a formal meeting, is an oral statement which describes and justifies a proposed course of action by the shareholders of a company without a formal board meeting having to be held between shareholders and/or directors. It may also be called a proxy resolution or a special notice of meeting. The term is actually derived from a term used in England called “consent” and was first used to refer to the act of giving approval of a proposal in order to grant a license in England, Scotland, Wales or Northern Ireland.

Consent of the directors generally can be expressed by a simple majority vote in the annual general meeting of shareholders, held at the beginning of June. This is not to imply any type of official or formal endorsement or agreement by the directors, as the directors of most companies have the authority and privilege to decide on and accept or reject the proposals put forward by their shareholders. In some instances, however, the board may choose to hold such a meeting of shareholders, called a general meeting, after a petition of shareholders has been submitted. Usually, a shareholder must give consent to a meeting of shareholders before he can participate in any proceedings of the meeting.

To give consent to a company’s action, shareholders should send an instrument of the intended action to the company along with a notice to the company. These instruments usually contain an overview of the proposed action, the reasons why the company should accept or reject the proposed action and any other information or data required. They will generally be submitted in the form of a proxy, or an information request.

After a shareholder’s consent has been received, the company has a number of days in which to comply with the request. It must then hold the meeting. Normally, a company will hold such a meeting in the nearest district. However, if the company is in a different state from the one from where the consenting shareholders live, the meeting may be held in a city other than the one from where they live if all the relevant local requirements are met.

Once the meeting has been held, any shareholder wishing to attend the meeting is entitled to do so, unless he or she and his or her agent are prevented from attending by any applicable provisions contained in the Articles of Incorporation or Bylaws of the company. or by applicable rules of the company’s board of directors. All shareholders present at the meeting are entitled to be present to make objections and comments at the meeting if they wish to do so.

If a ‘no objection’ vote is cast against a motion to approve a proposed transaction or action, it is immediately considered to be disapproved. If a ‘no objection’ vote is cast against a proposed transaction or action, the shareholder who cast it is entitled to speak up on the matter and to ask that the vote be cancelled, or that another proposal (sometimes referred to as a ‘proceeding under dissent’ be considered.

If a ‘no objection’ shareholder wants to withdraw his or her vote, he or she must provide written notice of his or her intention to the Board of Directors and to the Secretary of the company. The Board of Directors must then take immediate action in accordance with the requirements and procedures of the Company Law. The Secretary is required to inform the shareholders at least seven business days before the date for the next scheduled meeting of the Board of Directors.

In addition to the foregoing, it is also possible for a shareholder to submit a separate shareholder’s consent to an executive compensation plan or a change in policy or control over the Board of Directors. This consent is normally required in order to be included in the minutes of the Board of Directors meeting or to be included on any annual report from the Board of Directors. Once the consent has been submitted, the Company can either accept or reject the consent.

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