Q: Our board of directors often needs to act quickly outside of our regular meetings. Can we just vote by email?
A: While voting by email may seem like an efficient way to conduct business, a board may not use email to take a regular majority vote. An email exchange does not qualify as a valid meeting under the New Hampshire Business Corporation Act, which requires that all participating directors be able to simultaneously hear each other during the meeting.
Directors may instead use email to authorize an action by unanimous written consent if this method is not otherwise precluded by the corporation’s articles of incorporation or bylaws. An action by unanimous written consent requires the vote to be both: (i) unanimous (even if only a majority vote would be required at a meeting); and (ii) in writing, signed by each director, and included in the corporate records.
The requirement of unanimity makes this method best suited to uncontroversial decisions or actions that have already been discussed and deliberated by the board in a prior meeting, as the action is not valid if even one director fails to give consent.
The unanimous written consent should clearly state the action to be taken and must be signed by each director. Under New Hampshire corporate law, the definition of “sign” or “signature” requires an intent to sign or authenticate a document, and includes a manual, facsimile (scanned), conformed, or electronic signature, which is broadly defined as “an electronic sound, symbol, or process attached to or logically associated with a record.”
A carefully-worded email requesting a “yes” vote from each director and an affirmation of his or her intent to sign could qualify as a signed document, but it is not the recommended method, as it can result in unclear responses and cumbersome record-keeping. It also may not be recognized as a valid action by third parties such as banks.
A better practice is for directors to sign a printed copy of the consent and email a scanned copy to the corporate secretary or attorney to compile, or to use electronic signature software such as DocuSign or RightSignature, which streamlines the process by allowing directors to securely sign documents without the need for a printer or scanner. Both methods enable directors to take valid corporate action by email as long as the approval is unanimous.
Know the Law is a bi-weekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.