If your company is structured as a corporation and you have shareholders (whether it’s one shareholder or many), you’re required to hold an annual shareholder meeting. Check with your state to find out what the legal requirements are regarding when and how to hold a shareholders’ meeting.
If you’ve structured your business as a limited liability company (LLC), shareholders are called members and the rules are more relaxed. As an LLC, you’re not required to hold a meeting; however, if there are shareholders or investors, it’s a good idea to meet to discuss the company’s progress. The minutes from the meeting will help protect members from liability.
Shareholders are required to receive adequate notice about the date, time, and place of the meeting. The state’s corporation statute has regulations for the minimum notice you’re required to give your shareholders, but typically there’s a 10-day minimum requirement and a 60-day maximum. If a shareholder decides not to attend or is unable to attend, it’s fine to keep a document stating that fact.
How Meetings Work
So what goes on in a shareholder’s meeting? Items you’re required to cover usually include the appointment of directors, approval of the audited accounts, and approval of the annual budget. However, meetings can also address anything that’s of concern to the board of directors and is within shareholder control. Examples include the following.
- Amendments to bylaws or Articles of Incorporation
- A merger or reorganization of the corporation
- Sale or transfer of corporation assets
- Dissolution of the corporation
- Adoption of stock option plans
Daily operational details that are beyond the control of shareholders -- such as potential projects, payroll concerns, office equipment purchases, or other similar issues -- don’t need to be discussed.
Everyone has busy schedules, so keep the meeting organized and timely. Set an agenda and send it out ahead of time. When you send the invitation to the meeting, include a copy of the minutes from the last meeting, an itemized list of topics up for discussion, and an update of the company’s progress, including any financial statements. If you ask shareholders to look over the paperwork ahead of time, they can come prepared to ask questions or share their comments. Take the time to prepare visual aids (such as a PowerPoint) to keep everyone’s attention.
Assign someone to take minutes, as corporations are legally required to keep a written record of the meeting, and public companies are required to publish the minutes online. It’s also a good idea to send shareholders a follow-up letter with the minutes enclosed for their records. Any agreed-upon actions must be included in the minutes.
Shareholder meetings don’t have to occur only once a year. If you need to discuss other issues during the year, you can call a special meeting to address those issues.