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How do I appoint a new director to my company's board?

GovernanceDirectorsDelaware

A new director needs a seat to fill and a vote that puts them in it. The bylaws fix the number of directors, so if every seat is taken the board first resolves to increase the number, if the bylaws allow it. Then either the stockholders elect the new director, or the board fills the new seat itself. Both happen by written consent, with no meeting.

Stockholders or the board

In Delaware, stockholders can elect a director by written consent, and in a founder-owned company that consent is signed by everyone. A consent signed by fewer than all the stockholders runs into a proviso in the statute when it stands in for the annual election, so if not everyone will sign, hold a meeting or take advice. A seat that is vacant, or newly created by an increase in board size, can instead be filled by a majority of the directors then in office, even if that is fewer than a quorum, or by a sole remaining director. In a founder-owned company the founders are both the stockholders and the board, and the usual practice is a stockholder election, because it settles any later question of authority. Once investors hold preferred stock, the charter or a voting agreement says who elects which seat, and those documents control.

The papers

The signed consent, in the minute book. A director indemnification agreement, which most directors expect before they sign anything else, resting on the power Delaware gives a corporation to indemnify its directors. Directors and officers liability insurance is separate; a company with none will usually be asked for it. Then the state record: Delaware's annual report lists every director's name and address, so the new director goes on the next one. If the director will sign on the bank account, the bank needs its own resolution.

What investors expect

A board of three with one investor seat is the ordinary shape after a priced round. The financing documents specify it, and adding a director outside that structure needs the investors' agreement.

Arabella's formation packet elects the initial directors in the organizational consent. A later election is a short stockholder consent that is not a template today; ask Arabella what it should say.

Written by the lawyers who built Arabella. This is legal information, not legal advice for your situation, and reading it does not make us your lawyers. For a real dispute or a high-stakes decision, talk to a licensed attorney. More questions.