I’m generally pretty quick about following up on reader leads. But today’s post relates to a reader email from almost three years ago.
In this 2002 article and in MSCD 16.36 I discuss the implications of giving a written consent an as of date. Here’s what MSCD says:
A consent can, like a contract, be given an as of date, the purpose being to flag that the date given is not the signing date but rather a convenient legal fiction. In the case of consents of stockholders of a Delaware corporation or members of a Delaware nonstock corporation, this practice would seem to be inconsistent with section 228(c) of the Delaware General Corporation Law, which requires that every written consent “bear the date of signature of each stockholder or members who signs the consent.” This inconsistency could have ramifications. The 60-day period specified in section 228(c) for delivering a sufficient number of shareholder consents to take the corporate action in question runs from the date of the “earliest dated consent” delivered to the corporation. If the earliest dated consent bears an as of date and was actually signed on an earlier date, a court would likely consider that earlier date to be the starting point of the 60-day period. There is, however, no case law on this issue.
Whereas there was no case law when I first wrote about this issue in 2002, by the time MSCD came out a relevant case had appeared, namely H-M Wexford LLC v. Encorp, Inc., 832 A.2d 129 (Del. Ch. 2003). (Click here for a copy of this case.)
I was informed of this case in 2004 by Joy Moxon, now in-house with The Timken Company. Joy was used to seeing consents with one date at the bottom. She wondered whether this case meant that each shareholder signature should bear its own hand-written date.
In H-M Wexford, the plaintiff claimed that a consent signed by certain shareholders was invalid because the shareholders hadn’t dated the consent—instead, each consent bore the same pre-printed date. The defendants argued that because there was no question that the consents had been delivered within the 60-day period, the question of how the consents were dated was of no significance.
The court disagreed. It noted that under section 228(c), in order for a consent to be valid, a consent has to bear the date of signature of each shareholder. The court also noted that whereas in this case it might be possible to determine, by examining extraneous factors, whether the consents had been delivered within the 60-day limit, that would not always be the case, so the date requirement must be strictly enforced. The court refused to dismiss the plaintiff’s claim.
The reasoning underlying the court’s decision in H-M Wexford isn’t compelling. The court suggested that there were two potential problems with the way the consents in question were dated: First, that each signature was not individually dated. (The court stated that “The defendants do not dispute that the signers did not individually date their Consents.”) And second, that the one date that was on the consent was pre-printed.
But section 228(c) doesn’t in fact require that each shareholder date its signature. Instead, as noted above, it says that a consent must “bear the date of signature of each stockholder or member who signs the consent.” As a matter of semantics, you should be able to satisfy that requirement by having one date on the consent, as long as it’s the date when all shareholders signed.
Furthermore, as long as it’s the actual date of signing, there’s no reason why a date that’s “pre-printed” (which I take to mean a date that’s typed in and printed along with the rest of the document) should be any less satisfactory than a date that’s written in by hand.
So my conclusion is that a single, printed date at the bottom of a consent should be sufficient to satisfy section 228(c), as long as that’s the date the shareholders actually signed the consent. But I don’t know if Delaware practitioners have changed how they date consents to take into account the suggestion in the M-H Wexford case that one hand-written date per signatory is required.
One thing, however, is confirmed by this case: that using a date other than the date of signature (including an as of date) wouldn’t satisfy section 228(c).
Note that if shareholders sign a consent on different dates and two or more of them sign the same piece of paper, you’d need to include a separate date for each signature line. But if they sign counterpart copies, you could make do with the one date at the bottom, with a blank day, or day and month, or day and month and year, that each signatory could fill in by hand.
I don’t pretend to be an expert in Delaware law, so I’d be pleased if any Delaware attorneys passing through would offer their thoughts on this.