Conducting a Shareholder Meeting

By David Gass

A Shareholder Meeting is presided over by the Chairman. The responsibility of coordinating the meeting wrests with him unless the chairman assigns this responsibility to someone else. The formalities to adhere with, before calling a shareholders’ meeting, are

• Participants’ List : Preparing a comprehensive list of the participants of the meeting is the very first step in conducting a shareholder meeting. All the participants should be carefully noted to avoid any discrepancy of leaving someone important out of the meeting.
• Proper Notice : A proper notification, well in advance, should be issued to all the participants about the venue, timing and a brief agenda of the meeting. It should ideally be followed by a courtesy call reconfirming their intent to be present at the meeting.
• Agenda : A clear and well chalked out agenda should be formulated and circulated among the organizers and the participants, giving them a brief and a fair idea as to what is expected in the meeting.
• Reference Material : Any reference material having relevance to the meeting should be lined up. These can be documents such as the company’s charter, figures or reports which could be of importance regarding the agenda of the meeting and which might help the board to have a more comprehensive view of the situation in hand and facilitate a decision in that regard.

Importance of Shareholder Meeting:

Some of the aspects that come under the umbrella of Shareholders and which can not be decided without their consent are:

• The decisions pertaining to classes of shares, rate of annual dividend on respective class of shares.
• The decisions related to any change in management or board of directors such as addition or termination of its members.
• All the subjects related to the company’s image in the market or any damage to it.
• Decisions related to acquisition of other company.
• Decisions related to dissolution of the company.
• Approval of annual financial statements.

Essentials of Shareholder Meeting:

There needs to be not less than a specific number of participants for a meeting to be conducted. This is known as Quorum. Generally, the assembled shareholders should qualify for more than 51% shares, otherwise the status of the meeting remains unofficial and is devoid of the power to implement any decision or pass any resolution, and hence the Quorum should be religiously adhered by the coordinator of the meeting for making the efforts worthwhile. Although generally it is required to have a majority or more than 50% of votes to preside over any resolution, there are some aspects and subjects in a company’s charter where, according to law it is required to gather more than 65% votes to pass a particular resolution. These subjects include

• Decisions on the classification of shares and the number of shares to be offered to the particular class.
• Introduction of any change in the company’s charter.
• Dissolution of the organization.

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