Shareholder Meetings

Annual Meetings

Every state has routine requirements for shareholder meetings. Generally, shareholders are required to have (at least) an annual meeting. The main purpose of this meeting is to elect the Directors of the corporation, but may include any other matter within shareholder

control. Notice of the annual meeting must be in writing and sent to shareholders within a specified period of time, usually between 10 and 60 days prior to the meeting. Check your state's corporation statute for the minimum notice requirements, the specifics of which should be set forth in your corporation's Bylaws.

Special Meetings

Special shareholder meetings are not actually special. They are meetings of the shareholders other than the annual meeting, which is required. The Board of Directors will call a special shareholder meeting when it has a significant item of corporate business that requires shareholder approval. Special meetings may be called as designated in the Bylaws or state corporation statute, by the Board of Directors, or by a shareholder who has ownership of a designated percentage of corporation stock. Similar to annual shareholder meetings, notice of special shareholder meetings is also required.

Unlike the annual shareholder meeting, the only subjects that may be considered at a special shareholder meeting are those stated in the notice of the meeting. Most states require shareholder approval of the following items:

• Merger or reorganization of the corporation;
• Amendment to the Articles of Incorporation;
• Amendment of the Bylaws (other than an amendment settling the precise number of Directors within the range established by the Bylaws or Articles of Incorporation);
• Sale or transfer of all or substantially all of the corporation's assets;
• Issuance of certain securities;
• Adoption of certain stock option plans;
• Dissolution or winding up of the Corporation.

Shareholder Action by Consent

States have acknowledged that there may be instances where it is difficult for shareholders to physically attend required meetings. As a result, shareholders may conduct business by written consent without holding a meeting. Check your state's corporation statute to review its procedural requirements for written consent of shareholders without holding a meeting. The authorization for action by written consent is included in the Bylaws.

Voting

Shareholder voting requirements are stated in each state's corporation statute and set forth in the corporation's Bylaws. Some special voting requirements are set forth in the corporation's Articles of Incorporation.

Record Date

A record date is set by the Board of Directors for the purpose of determining whether shareholders may vote at a particular meeting. The record date also determines whether shareholders will receive dividends or participate in any corporation action.

Quorum

A quorum is based on the number of corporate shares issued and outstanding. If the Bylaws are silent on these issues, a majority of shares will constitute a quorum. No action may be taken by shareholders in the absence of a quorum. And if a quorum is present, action may be taken by majority vote except for those actions specified in the Articles of Incorporation, Bylaws, or state laws that require a greater percentage vote or supermajority.

Proxy Voting

A proxy is a written authorization given by one person to another so that the second person can act for the first, such as that given by a shareholder to someone else to represent him or her and vote his or her shares, as directed, at a shareholder meeting.

Shareholders may vote by proxy. The proxy must be in writing. A proxy counts for purposes of determining whether a quorum exists at a shareholder meeting.

Minutes and Written Consent

The actions taken by shareholders at annual and special meetings must be reflected in meeting minutes. Actions taken by written consent should also be reflected in the minutes.

Sample minutes, resolutions, and consents are available for review in the Forms & Agreeents section of AllBusiness.com.