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Can A Director Consent By Email?

The California General Corporation Law authorizes board action by written consent.  Cal. Corp. Law § 307(b).  Sometimes, I've been asked about signing an email consent.  Section 17 of the Corporations Code (which governs, but is not part of the General Corporation Law) doesn’t provide a very helpful definition of “signature”.  Section 17.1 was added because the Secretary of State wasn’t comfortable with accepting faxed filings without express statutory authorization.

However, I like to point out that the General Corporation Law doesn’t explicitly require that consents be signed by the Directors.  Section 307(b) refers a “consent in writing” and the “written consent or consents”.   Thus, I believe that the operative question is whether an email constitutes a writing, not whether an email has been signed by the director.

There are two definitions related to “writing” in the Corporations Code.  Section 8 is the most helpful because it defines “writing” to include electronic transmissions by and to the corporation (Sections 20 & 21).  Section 21 requires that (i) the corporation have in place reasonable measures to verify that the sender is the director purporting to send the transmission; and (ii) the transmission be capable of retention, retrieval and review and thereafter rendered into clearly legible tangible form (i.e., capable of being printed).  I would expect that email would meet the second requirement.  The first requirement relating to reasonable measures should be easy to satisfy, but I expect that it could be overlooked.  Section 195 to the GCL defines “written” and “in writing” as including facsimile, telegraphic, and other electronic communication when authorized by the Corporations Code, including an electronic transmission that meets the requirements of Section 20 (which deals with electronic transmissions by the corporation (not to the corporation (Section 21)).  One final note, both Sections 8 and 195 use the word “includes” which arguably could be interpreted as providing a non-exclusive definition.  Had the legislature wanted an exclusive definition, it could have used “means” as it does, for example, in section (§ 194.7).

 

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