What is a Shareholder Meeting and What Happens at One?
Every North Carolina Corporation is required to have meeting of its shareholders. This usually occurs once a year, or in accordance with the corporation's bylaws. The North Carolina Business Corporations Act sets out the requirements to the basic issues that arise in relation to a shareholder meeting. The act states a number of requirements, explained as follows. Most of it is spelled out in the North Carolina Business Corporations Act at N.C.G.S. 55-7-01 and its subsequent sections. Below are the most common questions about a shareholder meeting.
Where is the shareholder meeting held? The shareholder meeting may be held in North Carolina or at any place stated in the bylaws. Normally, is held at the corporation's principal office.
What happens if no meeting is held? The N.C. Business Corporations Act says that failure to have a meeting does not affect the validity of the company's actions. In short, there is no harm in not having the meeting, at least not as far as the state is concerned, though shareholders may have rights to call a special meeting if one is not held.
How is the meeting called? The board of directors usually calls the meeting. It is typically done in writing or electronically. For the shareholders' convenience, the meeting may be called no fewer than 10 days before, and no more than 60 days beforehand.
Do you have to come in person? Not necessarily. The Business Corporations Act provides that, if authorized by the board of directors, shareholders may appear "by means of remote communication." This is broad and could including telephone or videoconference. The corporation has a responsibility to ensure that the people participating are actually shareholders, and must give them a reasonable opportunity to participate.
What if a shareholder can't come to the meeting? A proxy is a written authorization allowing a third party else to represent a shareholder at a meeting. It is a short document that permits the third party to vote and act on behalf of the shareholder. These are commonly used.
What usually happens at a shareholder meeting? There are four main things that shareholders usually decide.
the shareholders usually get to elect the board of directors. Similar to our government where we elect the representatives who make the actual decisions of governing, the shareholders get to vote on the board of directors, who in turn guide the company and pick its officers.
Though the officers and directors get to make most of the decisions, sometimes there are decisions that only the shareholders get to approve. These are usually big decisions related to the structure of the corporation.
The shareholders usually are presented with financial statements so that they can see how their investment is performing and make inquiries to the directors.
Shareholders often ratify decisions made by the directors over the course of the year.
What else can be discussed at a shareholder meeting? Pretty much anything "that is appropriate for shareholder action" is a proper subject for the shareholder meeting. Typically, an agenda will be prepared ahead of time giving the main points that will be discussed. That said, shareholders may raise most any issue that would affect their, or the corporation's interests, or ask questions to the board.
A lot more can happen at a company's shareholder meeting. The above, however, gives a summary of most of the major and common aspects of one.
If you have any questions about business law, corporate law issues, or business disputes contact us at 980-999-3557. DYE CULIK PC is a Charlotte, North Carolina law firm who represents entrepreneurs, franchisees, and businesses in all aspects of business law and litigation.