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New business owners who form a corporation often wonder how to run their shareholder meetings.
Yes. 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.
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.
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.
Part of a Delaware corporation’s internal formalities include keeping minutes at shareholder meetings. These minutes are not provided to the Delaware Division of Corporations and are not part of the public record. They’re typically kept on file internally within the Corporate Kit. Whenever a meeting is held, written minutes are created documenting the actions taken at the meeting.
There are certain things written minutes should include at a minimum:
Generally, the secretary will prepare minutes within a few days of a meeting and distribute copies before the next meeting so they can be reviewed.
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.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE’S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.
There are 2 comments left for How to Run a Shareholder MeetingJoe said: Wednesday, June 20, 2018
In the case of a Close Corp C-Corp, can the Secretary record make an audio recording of the annual shareholder'conference call?HBS Staff replied: Thursday, June 21, 2018
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.
In terms of how the minutes are recorded, you can check with the Delaware General Corporation Law here:
Deborah said: Tuesday, February 13, 2018
Do annual Shareholder's meeting minutes need to be sent out to shareholders after it is recorded by the Secretary?HBS Staff replied: Wednesday, February 14, 2018
Typically, meeting minutes are sent out to shareholders, though you can double-check with an attorney to be certain in your specific situation.