Washington state has made significant updates to RCW 23B — in 2019/2020 (effective January 1, 2020) and again in 2024 (effective August 1, 2024). This post reflects those changes.
01 Why Washington Corporation Formation Requires Care
If you are forming a corporation in Washington, you need to get the Articles of Incorporation right the first time. Washington corporate law has historically not had the default settings that work for a growth-stage company. While the 2020 and 2024 legislative reforms improved several of those defaults, there are still provisions you need to include in your Articles or your company will not be set up correctly for venture financing, equity compensation, or an eventual exit.
The standard form of Articles of Incorporation on the Washington Secretary of State's website — and the forms used by most online incorporation services — do not include these provisions. If you use them, your lawyer will tell you that you need to amend and restate your Articles before you can raise capital or close an acquisition. That costs more than doing it right the first time.
02 Preemptive Rights
For corporations formed on or after January 1, 2020: preemptive rights do not exist by default. Under the current statute (RCW 23B.06.300), shareholders have preemptive rights only if the Articles of Incorporation affirmatively grant them. If you are forming a new corporation today, no action is needed on this point.
For corporations formed before January 1, 2020: preemptive rights apply by default and must be specifically overridden in the Articles of Incorporation. Under the old default, every shareholder had the right to purchase their pro rata share of any new issuance — which means you could not issue equity to employees, raise an angel round, or close a venture financing without first offering shares to all existing shareholders. If your pre-2020 Articles do not address preemptive rights, this needs to be fixed before your next equity issuance.
03 Shareholder Action by Less Than Unanimous Written Consent
Under Washington law (RCW 23B.07.040), shareholders cannot act by less than unanimous written consent unless the Articles of Incorporation specifically authorize it. This is not optional for a startup. You need the ability to approve routine corporate actions — increasing the stock option pool, amending the bylaws, approving a financing — by written consent of a majority of shareholders, without requiring a formal meeting or tracking down every shareholder for a unanimous signature.
This provision must appear in the Articles. It is not sufficient to include it only in the Bylaws — the statute requires Articles-level authorization. If you formed your company using the Secretary of State's standard form, you do not have this provision, and any sub-unanimous consent you have relied on may be invalid.
The 2020 and 2021 amendments to RCW 23B.07.040 added procedural requirements that apply even when the Articles authorize sub-unanimous consent. The corporation (or the person soliciting consents) must give notice to all non-consenting shareholders on or promptly after the record date. Once sufficient consents have been collected, additional notice must be given. Consents must indicate the date of execution, describe the corporate action being taken, and be delivered to the corporation within a 60-day window measured from the earliest dated consent. Electronic consents are specifically authorized. Your consent procedures need to account for all of these requirements.
04 Cumulative Voting
For corporations formed on or after January 1, 2020: cumulative voting does not apply by default. Under the current statute (RCW 23B.07.280), shareholders have the right to cumulate votes only if the Articles of Incorporation affirmatively grant it. No action is needed for new corporations.
For corporations formed before January 1, 2020: cumulative voting applies by default unless the Articles opt out. Cumulative voting allows shareholders to multiply their votes by the number of director seats being filled and cast all of those votes for a single candidate. For example, a shareholder with 1,000 shares voting on three director seats could cast all 3,000 votes for one candidate instead of spreading them evenly. This mechanism is designed to give minority shareholders board representation — but it is incompatible with how venture-backed companies structure their boards. No institutional investor will accept cumulative voting in a company they are funding. If your pre-2020 Articles do not opt out of cumulative voting, this needs to be addressed.
05 Reducing the Shareholder Approval Threshold for Major Transactions
For corporations formed on or after August 1, 2024: the default approval threshold for fundamental transactions (mergers, asset sales, dissolutions) is now a simple majority of outstanding shares — matching the Delaware default. No opt-down is needed.
For corporations formed before August 1, 2024: the default under RCW 23B.12.020 is two-thirds of outstanding shares. This supermajority requirement can make it significantly harder to close an acquisition, particularly if you have a fragmented cap table with angel investors, former employees, or other minority holders who may be unresponsive or difficult to locate. The Articles can reduce this threshold to a simple majority (but not lower). We recommend doing so for any company that anticipates growth-stage financing or an eventual exit.
06 Getting It Right
If you are forming a Washington corporation for a startup, hire an attorney who knows Washington corporate law. The cost of proper formation — including Articles that address preemptive rights, sub-unanimous consent, cumulative voting, and the approval threshold — is a fraction of what you will spend amending and restating deficient Articles later. And the legal risk of operating with incorrect defaults — particularly on preemptive rights and consent thresholds — is real.
If you formed your corporation before the 2020 or 2024 reforms, review your Articles against the checklist above. If any of these provisions are missing, an amendment is warranted before your next financing, equity grant, or significant corporate action.
Have questions about Washington corporation formation or need to review your existing Articles? Book a call.
Related Reading
For more on Washington State taxes and how they affect startups and founders, see the Complete Guide to Washington's New Income Tax. For entity selection considerations, see the Startup Law Glossary and the Complete Guide to Equity Compensation.
