Corporate Shareholder Agreement Governance-Override Requirements in Washington

At a glance

Requirements one by one

Washington requires a separate all-shareholder writing

A compliant agreement that is not contrary to public policy is effective among the shareholders and corporation even when inconsistent with another provision of the Washington Business Corporation Act. Unlike many states, Washington does not state an articles or bylaws route: all current shareholders must execute a written agreement and make it known to the corporation (RCW 23B.07.320(1)-(2)).

The subject menu covers eliminating or restricting the board, distributions subject to the cross-referenced limit, director and officer selection or removal, divided or weighted voting, property and service arrangements, transferred management power, an express deadlock-resolution process, dissolution triggers, and other corporate-power or relationship provisions (RCW 23B.07.320(1)).

Amendment and successor-holder rules are agreement-sensitive

Amendment defaults to all shareholders at the time, but the agreement may provide otherwise. Unless it also provides otherwise, any person later acquiring outstanding or newly issued shares—by purchase, gift, operation of law, or otherwise—is deemed to assent and become an agreement party (RCW 23B.07.320(2)-(3)).

The shareholder definition includes a beneficial owner to the extent of rights granted by a nominee certificate on file. If no shares have issued, incorporators or subscribers may act as shareholders when the agreement is made (RCW 23B.01.400(47), 23B.07.320(7)).

Notice omission preserves validity but gives a purchaser two paths

The agreement's existence must be conspicuously noted on outstanding certificates or the cross-referenced information statement for uncertificated shares. Existing certificates must be recalled and replaced. Missing notice does not invalidate the agreement or action taken under it (RCW 23B.07.320(3)).

An aggrieved purchaser who lacked actual or constructive knowledge can rescind by the earlier of 90 days after discovery or two years after purchase. Alternatively, the purchaser may keep the shares subject to the agreement and sue for damages resulting from nondisclosure. Compliant notation and timely delivery of the uncertificated-share statement supply constructive knowledge (RCW 23B.07.320(3)).

Public trading and shifted power have automatic consequences

The agreement ceases to be effective when shares are nationally exchange-listed or regularly traded in a market maintained by members of a national or affiliated securities association. Section 23B.07.320 states no separate board- cleanup amendment after cessation (RCW 23B.07.320(4)).

When the agreement limits board discretion or power, directors are relieved and the persons receiving the power assume the corresponding director-law liability. The agreement's existence or performance, partnership-like treatment, or failure to observe covered formalities is not by itself a ground for shareholder personal liability (RCW 23B.07.320(5)-(6)).

Current duration is agreement-set, but older agreements keep the old rule

Any current duration limit is stated in the agreement. An agreement made while the statute imposed a ten-year limit unless the agreement provided otherwise continues under the duration provisions then in effect (RCW 23B.07.320(8)).

What trips people up

Washington's later-holder rule is broader than a purchaser-notice rule. Gift and operation-of-law acquirers, as well as purchasers and recipients of newly issued shares, ordinarily assent and become parties unless the agreement changes that default (RCW 23B.07.320(3)).

The purchaser remedy is also not rescission-only. An eligible purchaser can keep the shares under the agreement and seek nondisclosure damages instead (RCW 23B.07.320(3)).

Common questions

Can the agreement be placed only in the bylaws?

Not under this route. Section 23B.07.320(2)(a) requires a written agreement executed by all current shareholders and made known to the corporation.

Can the agreement opt out of automatic successor assent?

Yes. Automatic assent and party status apply “unless the agreement provides otherwise” (RCW 23B.07.320(3)).

Does Washington impose a ten-year maximum on a new agreement?

No current fixed maximum is stated. Subsection (8) preserves the former duration regime only for agreements that became effective while that prior ten-year rule was in force.

Statutes and sources

• RCW 23B.01.400(6), (47) — domestic-corporation and shareholder definitions, including nominee-certificate beneficial owners. Official Washington Legislature text, accessed August 27, 2026.
• RCW 23B.07.320(1)-(2) — corporation-binding override, public-policy limit, permitted subjects, written instrument, unanimity, corporate knowledge, and amendment. Official Washington Legislature text, accessed August 27, 2026.
• RCW 23B.07.320(3) — certificate or statement notice, recall, validity, successor assent, purchaser knowledge, rescission, clocks, and nondisclosure damages. Official Washington Legislature text, accessed August 27, 2026.
• RCW 23B.07.320(4)-(8) — public-trading cutoff, shifted-power liability, shareholder personal-liability protection, organizer/subscriber route, current duration, and legacy duration. Official Washington Legislature text, accessed August 27, 2026.