Calling and Holding a Board Meeting in a Delaware Corporation

A Delaware Corporation’s bylaws are crucial for outlining the operational framework and governance mechanics of a corporation. They define the relationships between the Board of Directors, officers, and shareholders. They outline the procedures for board meetings along with the absolute minimum number of directors necessary to establish a quorum. These bylaws provide the guidance for effective corporate management and decision-making processes.  Delaware corporation’s board of directors can act through two means: (1) a vote of directors held at a board meeting, or (2) through written consent without holding a meeting, unless written consent is prohibited by the corporation’s governing documents, the bylaws. A valid board meeting must comply with the corporation’s governing documents, Delaware’s corporate statute, and applicable judicial decisions. In this post, we describe the requirements for calling a board meeting and the required number of directors required for holding valid board meetings.  

A corporation must hold an annual meeting to elect directors, but its governing documents will provide for an annual meeting (and, depending on the corporation, other periodic meetings) and special meetings (called as needed).

Properly Called / Formalities Satisfied.

A corporation’s bylaws ordinarily provide who can call a corporate board meeting, the notice directors must receive (which the directors can waive), the way notice of a meeting must be given (email and/or mail), the required contents of the notice, and any provisions addressing the location of meetings (permitted distance from principal offices). Compliance with these procedural requirements is important -- board action taken at an improperly held meeting can be deemed invalid and ineffective and can lead to issues among conflicting factions of directors.

Quorum Requirement.

To establish a quorum, a certain percentage of the directors must attend a meeting to allow for valid board action. The lowest permitted quorum is 1/3 of the board, but the corporation’s governing documents can set higher requirements. The necessary quorum for taking action is an important consideration, as the lower the quorum requirement, the more easily a small number of directors can act without the participation of the others. Board action requires the vote of a majority of a quorum of the directors. This makes the quorum requirement very important, as it serves as the minimum denominator for calculating whether the required vote has been obtained.

For example, assume a seven-member board and the minimum (1/3 or more required to attend) the following chart shows how decisions can be taken:

When it comes to calling a board meeting in a Delaware company, there are a few key things to keep in mind to ensure the meeting is considered valid. One important takeaway in this blog is understanding the quorum required and how to properly call the meeting. In the second part of this post, we'll delve into the means of attendance, documenting action through written resolutions and board minutes, the duty of care, and how to address potential conflicts of interest. Stay tuned for more valuable insights!