Washington corporate-law defaults depend in part on formation date. This guide addresses preemptive rights, written consents, cumulative voting, and major-transaction approval thresholds under RCW 23B.
01 Why Washington Corporation Formation Requires Care
Review the articles alongside the bylaws, shareholder agreements, and proposed transaction. Some provisions change statutory defaults; others are negotiated governance choices. A company is not automatically formed incorrectly because it keeps a default rule.
Read the actual filed articles and amendments. Do not infer their contents from the service used to incorporate. A later financing may require negotiated amendments even when the original formation documents were appropriate.
02 Preemptive Rights
For corporations formed on or after January 1, 2020 (SSB 5003, ch. 141, Laws of 2019): 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.
Corporations formed before January 1, 2020: Preemptive rights apply by default unless the articles provide otherwise. But they do not cover every issuance. RCW 23B.06.300(3) generally excludes specified service-compensation issuances, shares under the initial financing plan, and issuances for nonmoney consideration, subject to the articles. Share-class limitations and waivers also matter. Check the actual issuance and rights before concluding that an offer to existing holders or an amendment is required.
03 Shareholder Action by Less Than Unanimous Written Consent
RCW 23B.07.040 permits less-than-unanimous shareholder written consent only with articles-level authorization. The required votes are those needed at a meeting where all entitled shares were present and voted; this is not always a simple majority. Such authorization can be useful, but is a governance choice rather than a universal startup requirement.
A bylaw alone does not supply that authorization. Inspect the filed articles before relying on a sub-unanimous consent. Separately determine whether the proposed action requires shareholder approval, board approval, or both.
Follow subsection (3)’s solicitation and approval notices, including notice to nonvoting shareholders where specified. The consent must carry required transaction materials. Sufficient executed consents must reach the corporation within 60 days after the earliest execution date among consents delivered under the statute; compliant electronic consents are permitted.
Subsection (6) prevents failures of the subsection (3) notices from automatically invalidating or delaying approval, while preserving judicial remedies. Articles-required advance notice is different: subsection (4) makes satisfaction of that period a condition of effectiveness.
Second, there is a direct interaction with cumulative voting. Under RCW 23B.07.040(1)(a)(ii), if your Articles authorize shareholders to cumulate votes in director elections, shareholders may not elect directors by less than unanimous written consent at all — regardless of what your consent provision says. That is one more reason to address cumulative voting, discussed next.
04 Cumulative Voting
For corporations formed on or after January 1, 2020 (SSB 5003, ch. 141, Laws of 2019): 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.
Corporations formed before January 1, 2020: Cumulative voting applies by default unless the articles provide otherwise. With 1,000 votes and three seats for which the holder may vote, the holder can allocate 3,000 votes to one candidate or divide them. RCW 23B.07.280 also sets meeting-notice conditions. Consider how this interacts with negotiated board rights; investor preferences are not a statutory ban on cumulative voting.
05 Reducing the Shareholder Approval Threshold for Major Transactions
Corporations formed on or after August 1, 2024: The listed major-transaction statutes generally use a majority of entitled votes where shareholder approval is required. Check separate voting groups, any higher articles requirement, permitted board conditions, and transaction-specific exceptions.
Corporations formed before August 1, 2024: The listed statutes generally retain a two-thirds default, subject to authorized changes and transaction-specific rules. Review the operative provision for the particular action:
- Mergers and share exchanges — RCW 23B.11A.040(5)
- Sale of substantially all assets — RCW 23B.12.020(8)
- Dissolution — RCW 23B.14.020(5)
- Amendment of the Articles — RCW 23B.10.030(5)
One trap worth flagging: the 2024 legislation repealed the old merger chapter and recodified it. Mergers moved from chapter 23B.11 to chapter 23B.11A. Articles, bylaws, and form documents drafted before August 2024 frequently cite RCW 23B.11.030, which no longer exists. If your governing documents cross-reference a repealed section, that is worth cleaning up at your next amendment.
Reducing a permitted supermajority threshold can make approval easier, but also changes minority protections. Check each required voting group and any separate investor consent. For example, RCW 23B.11A.040(5) allows pre-August 2024 articles to change merger thresholds, but not below a majority of all entitled votes and each separate voting group. Amending the articles must itself receive the required approvals.
06 Getting It Right
Choose governance provisions that fit the company’s ownership and plans. Review the actual statutory defaults and negotiated rights rather than treating all departures from a venture-financing form as defects.
For an older corporation, compare formation-date defaults with the current articles and amendments. Identify whether a proposed transaction needs a waiver, approval, or charter change; a missing optional provision does not invariably require amendment before the next grant or financing.
Have questions about Washington corporation formation or need to review your existing Articles? Book a 20-minute call.
Related Reading
QSBS depends on federal tax classification and the stock’s issuance and holding-period facts. An LLC taxed as a C corporation may issue qualifying equity; entity form alone does not decide eligibility. For qualifying stock acquired after July 4, 2025, the exclusion tiers are 50%, 75%, and 100% at holding periods of at least three, four, and five years. Earlier acquisitions require more than five years. Section 83 and tacking rules can affect timing. See why only C corps can issue QSBS, the QSBS eligibility checklist, and the complete guide to Section 1202. The LLC-versus-C-corp decision itself is covered in the startup formation guide.
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.
This post is for educational purposes only and is not legal or tax advice. Consult a qualified attorney about your specific situation.
