What are Corporate Meetings?
Corporations typically hold several required formal meetings each year. The exact requirements vary depending on state laws and your corporation’s bylaws, but it’s important to follow these formalities to protect your corporate status and preserve your limited liability protection.
Below, we’ll discuss two of the most common and significant corporate meetings: the annual shareholders meeting and the annual directors meeting.
The Annual Shareholders Meeting
The annual shareholder meeting is where the shareholders of a corporation gather to discuss and vote on important issues facing the company. The annual corporate shareholder meeting is also referred to as a general meeting or a stockholder meeting.
Typically, a big part of the annual shareholder meeting is appointing or removing members of the Board of Directors. The agenda might also include voting on shareholder initiatives and the approval of certain financial transactions, such as mergers, but the issues discussed and voted on vary from corporation to corporation.
The Annual Directors Meeting
An annual corporate director meeting is a required annual meeting of the Board of Directors. The Board of Directors, or simply “the Board,” is a group of people elected to represent the corporation’s shareholders. During this meeting, the Board can discuss any number of topics, such as reviewing the performance thus far of the company, or discussing future actions of the corporation.
Often times, the Board of Directors will meet more than once a year, whenever dealing with a business affair that could be deemed outside of ordinary activity.
When are the shareholder and director meetings held?
The annual shareholder and director meetings are typically held after the end of the corporation’s fiscal year, with more details such as time and location dictated by the corporation’s bylaws. Often, the shareholders meeting and directors meeting are held back-to-back.
Are there required procedures for the shareholders and directors meetings?
There is usually no specific state requirements for how to conduct these meetings. Instead, procedures are decided by the shareholders and directors themselves. Often, the flow of a small to medium-sized corporation meeting for shareholders and directors is to have a guided discussion on issues, voting on applicable issues, a performance review of the company, or a discussion of the company’s direction.
Are meeting minutes required?
Yes. Meeting minutes serve as a record that the corporation fulfilled its legal duties and provide details about the decisions made. In fact, you’re required to record meeting minutes as part of ALL corporate meetings.
Before Your Corporate Meetings
Review your corporation’s bylaws for a preset annual shareholder and director meeting date and notice period.
Most likely, your bylaws already include a set date, time, and location for your annual meeting of the shareholders and directors, usually soon after your corporation’s fiscal year has ended.
A notice period in which you’ll need to provide the formal notice or reminder to the shareholders of the meeting time and place should also be noted in your corporation’s bylaws, and, if not, there will be state laws in place.
Some state require a certain number of participants (called a “quorum”), while some states either have no limits or let corporations set the limit in their bylaws.
After Your Corporate Meetings
Ensure that the meeting minutes are recorded accurately.
Minutes are an essential part of the meeting and need to be recorded in an official way. Minutes should be recorded by the meeting secretary.
Basic meeting information must be noted, such as start time, end time, date, and place. The secretary should confirm in the minutes that any quorum (required number of shareholders present) was met and record the names of those in attendance.
Meeting minutes should reflect all significant information, such as agenda item topics discussed. Any election or issue voted on should include a description of the manner of voting, the number of votes for each option, and the overall results.
Typically, the meeting minutes need to be signed by the secretary of the shareholder meeting session.
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