New business owners who form a corporation often wonder how to run their shareholder meetings.
Here are answers to common questions about shareholder meetings.
Do I have to hold an initial shareholder meeting?
Yes, again. Delaware law requires every corporation to hold an annual shareholders meeting at least once every 13 months. Generally, the date of the annual meeting is contained in the bylaws of the corporation. A meeting must be held, regardless of the number of shareholders in the corporation.
What should I discuss at a shareholder meeting?
During the meeting, any number of topics can be discussed. It is imperative that, at the very least, the election of the Board of Directors is accomplished.
In order to have a legal meeting you must have a quorum of shareholders present. A quorum is defined as a representative of more than half of all shares outstanding.
There are many other items that can be included on the agenda for an annual shareholder meeting. The election of officers can be submitted by the Directors at shareholders’ meetings.
The appointment of a corporate attorneys and/or accountant is also a typical agenda item.
Dividend distribution can be debated, but dividends must be proposed by the Board of Directors and then approved by the shareholders. You can also discuss capital improvements and debt obligations.
Shareholders can play a role in what is discussed at the annual meetings by writing the Board of Directors beforehand with their suggestions. Shareholders should remember that it is their right to elect the Board of Directors. Then the Board of Directors sets the direction of the company.
When should I hold a shareholder meeting?
An annual shareholder meeting is typically scheduled just after the end of the fiscal year. This allows for the previous year’s financial performance to be fully assessed and discussed.
The timing also allows for any newly elected officer and director information to be collected and made available for the Delaware annual report filing, which must be submitted by the March 1 deadline.
What else am I required to do at a shareholder meeting?
Minutes of every shareholder meeting must be recorded by the corporate secretary, which should include where and when the meeting is held, who is in attendance at the meeting and any significant actions that are voted on or taken at the meeting.
The meeting minutes should be approved by a majority vote of the shareholders present at the next meeting and maintained in the corporate record book and available for review when necessary.
We are available to help with any questions you may have about a Delaware corporation; however, we are not attorneys and cannot give legal advice. If you need legal advice, please contact a lawyer familiar with Delaware corporate law.