In a Delaware startup, the board runs the company, and stockholders vote on a short list of decisions: amending the certificate of incorporation (including adding authorized shares for an option pool or a priced round), electing and removing directors, selling or dissolving the company, and adopting the stock plan. They also vote on anything your preferred investors’ protective provisions cover. Issuing shares, SAFEs and options is a board decision. Startups get stockholder approval by written consent, signed by holders of a majority of the voting power, with notice to everyone else.
Key takeaways
- The board issues stock. Stockholders vote only when the charter has to change or a protective provision applies.
- SAFEs, option grants and indemnification agreements are board-only decisions.
- Approval comes by written consent, not a meeting. You need signatures from a majority of the voting power, not from every stockholder.
- After you raise a priced round, check your preferred stock’s protective provisions before any major decision.
This page describes Delaware corporations, which is what most venture-backed startups are. Other states’ rules differ.
Who approves what?
| Action | Board | Stockholders (majority of voting power) | Preferred class vote (after a priced round) |
| Grant options or restricted stock | Yes | No | Rarely |
| Issue SAFEs or convertible notes | Yes | No | If they rank senior to or equal with the preferred |
| Adopt the stock plan | Yes | Yes (needed for ISOs) | Usually |
| Increase the option pool | Yes | Yes if authorized shares must increase, and for ISOs | Usually |
| Amend the charter (including more authorized shares) | Yes | Yes | Usually |
| Priced financing round | Yes | Yes (new charter) | Yes, from existing preferred |
| Amend the bylaws | Usually (if the charter allows) | Can, but usually not needed | Usually |
| Stock split | Yes | Usually (charter amendment) | Usually |
| Fill a board vacancy or new seat | Yes, unless the charter or bylaws say otherwise | Can | For seats the preferred elects |
| Elect directors annually | No | Yes | Preferred elects its own seats |
| Remove a director | No | Yes | For seats the preferred elects |
| Sale or merger of the company | Yes | Yes | Usually |
| Dissolution | Yes | Yes | Usually |
| Indemnification agreements with directors and officers | Yes | No | No |
| Deal with a director, officer or major stockholder | Disinterested directors (or stockholders) | Alternative route | Rarely |
When do stockholders vote on the charter or bylaws?
Charter (certificate of incorporation): every amendment needs board approval and then stockholder approval. The most common startup example is increasing authorized shares so you can grow the option pool or close a priced round. If you’ve raised a priced round, the preferred usually gets a separate vote too. See Certificate of Incorporation.
Bylaws: most startup charters let the board amend the bylaws on its own. Stockholders keep the power to amend them too, and preferred investors usually have a veto.
Do stockholders have to approve new shares, options or SAFEs?
No. Under Delaware law, the board issues stock, options, warrants and SAFEs, as long as there are enough authorized shares in the charter. Stockholders get involved only when:
- The charter must change, for example to add authorized shares or create a new class of preferred stock.
- A protective provision applies. After a priced round, preferred investors usually must approve new securities that rank senior to or equal with theirs.
- A contract requires it, such as a stockholders’ agreement or investor rights agreement. Since 2024, Delaware expressly allows these agreements to give investors approval rights over board actions.
A SAFE round on its own is a board decision. See Startup Board Consent.
Do stockholders vote on a sale?
Yes. A merger, a sale of all or substantially all of the company’s assets, and a dissolution each need board approval and then approval from holders of a majority of the outstanding voting stock. Preferred investors usually have their own vote. When your startup buys another company, that’s usually a board decision unless you’re issuing enough new stock to need a charter amendment.
Who changes the board?
- Annual election: stockholders elect directors every year. See “Do we need an annual meeting?” below.
- Removal: stockholders holding a majority of the voting power can remove a director. Seats elected by the preferred are removed by the preferred.
- Vacancies and new seats: the board can usually fill them itself, and in most startups the board can also change its own size under the bylaws, unless the charter, bylaws or a voting agreement says otherwise.
After a priced round, a voting agreement usually decides who fills each seat. Check it before any change.
Do stockholders vote on a stock split?
Usually, because a split is done by amending the charter. One exception: since 2023, a Delaware company with only one class of stock can do a forward split, with a matching increase in authorized shares, without a stockholder vote. Once you have preferred stock, assume stockholders vote.
Why do stockholders approve the stock plan?
Delaware law doesn’t require it, but federal tax law does if you want to grant ISOs: stockholders must approve the plan within 12 months of the board adopting it. Increasing the number of shares in the plan needs stockholder approval for the same reason, and after a priced round the preferred usually has to approve it as well. See Employee Option Pool.
What about deals with insiders?
A deal between the company and a director, officer or major stockholder (a lease from a founder, a loan from an investor, a contract with a director’s other company) should be approved by the directors who have no stake in it, after full disclosure. Approval by disinterested stockholders is an alternative route, not the default. Delaware updated these rules in 2025, including for deals with controlling stockholders. If a founder controls the company and is on both sides of the deal, talk to counsel before signing. See Fiduciary Duties of Founders.
How do stockholders approve things in a startup?
By written consent, not a meeting. The consent must be signed by holders of at least the voting power a meeting would require, usually a majority of the outstanding shares, plus any separate class vote. It doesn’t need every stockholder. Signatures can be electronic and on separate copies. The company must then promptly notify the stockholders who didn’t sign.
Do we need an annual meeting?
Delaware requires directors to be elected every year. Most startups do this with an annual stockholder written consent re-electing the board instead of holding a meeting. If not every stockholder signs, the consent counts as your annual election only if it elects the entire board. And if 13 months pass without an election, a stockholder can ask a Delaware court to order a meeting. Put it on the calendar, because it’s commonly missed.
What information can stockholders demand?
Stockholders can inspect certain company records, including the charter, bylaws, board and stockholder minutes and consents, and annual financial statements, if they state a proper purpose. Delaware narrowed and clarified these rights in 2025. Keep your minute book and consents organized, and a records request becomes a simple task.
What do preferred investors get to approve?
After a priced round, preferred investors usually hold protective provisions, a list of actions that need their separate approval even if the board and common stockholders agree. A standard Series A list covers:
- Selling, merging or dissolving the company
- Amending the charter or bylaws
- Creating securities that rank senior to or equal with the Series A
- Redeeming shares or paying dividends
- Adopting or changing the stock plan, including increasing the pool
- Taking on debt above a set amount
- Changing the number of board seats
- Creating or disposing of subsidiaries
Read your own charter for the exact list. See What Are Protective Provisions?
Related: What Does My Startup’s Board Need to Approve? · Startup Board Consent · What Are Protective Provisions?
