If you are the owner of a small corporation, do you ever find yourself wondering whether you really need to have those shareholder and board meetings that are required by your articles of incorporation and bylaws?
The short answer to that question is “yes, you do,” but I'm going to give you the long answer.
By law in most states, a corporation has a board of directors and shareholders and both of those groups of people are required to have annual meetings (that is, unless you're a closed corporation, an entity that has elected not to have a board of directors). The main purpose for the shareholder meeting is to elect a board, and the main purpose of the board meeting is to elect the officers of the business and conduct any important business that the board is authorized to conduct.
When you have an in-person meeting, you have to give proper notice to all necessary attendees and, before any business can be conducted, there must be a quorum. If proper notice is not given and if there is not a quorum, the meeting cannot go forward.
Meetings do not necessarily have to be in person. Most states allow corporations to use what is called a “consent in lieu of a meeting.” The consent is a written document that includes the decisions, or “resolutions, of the board or shareholders. The consent must be signed by all of the shareholders or all of the directors and it has to be unanimous.
Whether the meeting is in person or by consent, the fact that the meeting occurred must be documented in writing and placed in the company's governing documents.
KATHERINE L. TAYLOR, ATTORNEY AND CPA
5850 Waterloo Rd