A waiver of notice can be used in place of formal notice in situations where it is required by law.
- Working around formal notice requirements
- Increasing the efficiency of corporate decision making by streamlining paperwork requirements
In many instances, directors, shareholders, and corporate officers are entitled to a formal notification of an upcoming event. The timing and format of these notices are defined by state law, and they can vary from jurisdiction to jurisdiction. By using a waiver of notice, corporations can work around the inefficient and often cumbersome process of formal, legal notification.
Notice is required by law in situations where a person has a legal right or obligation to be in a certain place at a certain time. A court subpoena is a form of legal notice, as is the service of a complaint for civil litigation. In these circumstances, the person receiving the notice has an obligation to participate in proceedings because they involve his or her legal rights. Shareholders and directors of public corporations also have legal rights to organize and make certain decisions about the future of the company. As a result, they are entitled to formal notice of important meetings and events. Failing to provide legal notice to everyone legally entitled to receive it typically makes any subsequent decisions on related issues null and void.
In order to avoid the issues that can arise when formal legal notice is required, companies can ask shareholders or directors to sign a waiver of notice. By executing this document, the shareholder or director has waived the right to be formally notified and the meeting can move forward with or without their attendance.