Shareholder Meetings

By David Gass

Every year a corporation must by law hold shareholder meetings that are open to all those who own shares in the corporation. The Annual General Meeting of the corporation is an opportunity for the corporation to report to its shareholders on the business of the company and these shareholder meetings give people a chance to review the progress of the business and ask questions of the officers about its policies and operations.

Appropriate notice should be given to all shareholders about these shareholder meetings that include the time, date and location of the meeting. Whenever possible these shareholder meetings should be held in person and an opportunity provided to shareholders to discuss agenda items before a vote is called and a decision is made. Directors of the corporation should be available at the shareholder meeting to answer questions and provide background documentation.

The corporate law on shareholder meetings varies from state to state but almost all require them to be held on annual basis. The main purpose of the shareholder meeting is to elect the directors of the corporation, but the meeting may include any other items of interest to the corporation or the shareholders.

Special shareholder meetings may also be called when an issue is so important that it cannot wait until the Annual General Meeting of the corporation. Special shareholder meetings may be called for a number or reasons including a merger or reorganization of the corporation, the sale and transfer of all or most of the corporate assets, or the dissolution or winding up of the Corporation.

Voting at shareholder meetings takes place in accordance with the corporation’s bylaws and under the regulations of the state in which the corporation is registered. This usually includes a policy of proxy voting whereby management of the corporation obtains the permission of non present shareholders to vote on their behalf.

A quorum at a shareholders meeting is based on the number of shares that have been issued by the corporation and if a quorum is present the meeting is deemed to be lawfully constituted and can proceed with making the necessary decisions. The definition of quorum is usually found in the corporation bylaws. Some corporation bylaws and states require what is called a super majority in the case of major corporate decisions at shareholder meetings.

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