Shareholder Meetings

Shareholders, like Directors, cannot act unilaterally. They must act either at a regular Shareholders' Meeting (ordinarily held annually after the end of the fiscal year) or at a Special Meeting of the Shareholders (ordinarily called at the request of the Board of Directors).

There must be notice of the meeting and notice of the agenda (items to be discussed and voted upon). Most states require 10 days' notice and not more than 50 or 60 days' notice be provided. You can specify a time period in the corporation's Articles of Incorporation. Waivers of notice are allowed if the Board fails to notify Shareholders of the meeting or an emergency prevents adequate notice.

Shareholders may typically vote in person or vote by proxy.  Voting by Proxy means having another person vote in the stockholder's place. It is important to remember that Shareholders vote their shares; i.e. it is the number of shares not the number of Shareholders that decide a vote. For example, if Shareholder A holds 500 shares, and Shareholder B holds only 100 shares, there will be a total of two Shareholders present with a total of 600 shares represented. Obviously Shareholder A has much more voting power than does Shareholder B.

As with Directors, there must also be a complete and accurate record or Minutes of a Shareholders' Meeting.

Some states allow certain actions, e.g., amending the Articles of Incorporation, to be taken without holding a Shareholders' meeting if (1) the corporation obtains a written consent to the action from ALL the Shareholders, AND (2) the written consent states what action the Shareholders have consented to. Check with your state to find out how many Shareholders must sign a consent for it to be valid.

Occasionally, there will be a combined meeting of Shareholders and Directors. This is perfectly permissible, however, you still need complete Corporate Minutes for each of the meetings. Of course, corporate minutes from these meetings are extremely valuable in the case of lawsuit or any other action taken against the company, shareholder disputes, or any other future strategy formulation.