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Holding Corporate Meetings

The benefits of having annual meetings include the following:

To “tell the story” of the corporation, its successes, challenges, and the opportunities for its future
Document the history of the corporation

Importance of Annual Meetings

The fundamental issue for a corporation if the annual meeting is not legally constituted and records properly maintained is that the corporation could loose its legal standing as a corporation. This could change the legal standing of the owners, directors, officer, and employees of the corporation removing their liability protection and exposing their personal assets in case of a lawsuit.

Shareholder Meetings

The process of the annual meeting for the shareholders begins with a review of the state and federal laws and regulations governing corporations in the state the company resides. Also important are the internal governing documents of the corporation including the articles of incorporation and bylaws. Understanding pertinent laws, regulations and internal documents leads the corporation to:

ensure that proper minutes are being taken of the meeting as a permanent record of the proceedings for the corporation
determine who are the participants to invited to the annual meeting
develop the agenda for the shareholders to vote on
In general, the Chairman of the Board:

opens the meeting on time with introductions, thank you, explains how minutes are being taken, clarifies his role in the process
establishes ground rules
keeps the annual meeting on time while participants accomplish the items listed on the agenda for the shareholder’s annual meeting
evaluates the process by periodically soliciting participant’s assessment of the progress of the meeting
evaluates the effectiveness of the meeting at the end of the meeting to improve future effectiveness
closes the meeting a positive note, reviewing actions and assignments, set the time for the next meeting, ask each person if they can commit to attend; clarify when meeting minutes or action will be reported back to the board

Board of Directors Meetings

Hopefully board members have received board training which should include their understanding of relevant state and federal laws and regulations as well as understanding governing bylaws. Understanding pertinent laws, regulations and internal documents leads the Board of Directors to:

ensure that proper minutes are being taken of the meeting as a permanent record of the proceedings for the corporation
determine who are the additional participants to invited to the annual meeting
develop the agenda for the issues the Board of Directors should take action on
In general, the Chairman of the Board:

opens the meeting on time with introductions, thank you, explains how minutes are being taken, clarifies his role in the process
establishes ground rules
keeps the annual meeting on time as the Board of Directors accomplish the items listed on the agenda including any organizational matters the board needs to accomplish such as electing a Chairman, Vice Chairman a Secretary, a Treasurer, chairmen responsible for board-level committees, any other duties as prescribed in the bylaws
evaluates the process by periodically soliciting participant’s assessment of the progress of the meeting
evaluates the effectiveness of the meeting at the end of the meeting to improve future effectiveness
closes the meeting a positive note, reviewing actions and assignments, set the time for the next meeting, ask each person if they can commit to attend; clarify when meeting minutes or action will be reported back to the board.

The Importance of the Meeting Agenda

The importance of the agenda is to keep the annual meeting organized and on track to accomplish the goals of the annual meeting. Since the agenda items for the annual meeting are dictated by state and federal rules and regulations and governed by the corporation’s bylaws, provisions for taking minutes and recording decisions is critical. The agenda needs to be designed to get the participants involved in the discussion. In many annual meetings, Robert’s Rules of Order are adopted which helps in keeping parliamentary rule effective for the meeting. In the agenda, as a general rule, the minutes of the prior annual meeting are adopted, major topics are listed and include the types of action needed, the types of output expected (decision, vote, action assigned to someone), and time estimates for addressing each topic. Minutes of the annual meeting should follow the agenda including what was discussed, that was settled or resolved, and the actual vote.

When to Hold Annual Meetings

The time of the annual meetings may be prescribed in the bylaws and determined by state regulation. State regulations may require certain filings within a certain timeframe following the end of the fiscal year for the corporation which will drive the timing of the annual meetings.

Meeting Notices

The purpose of annual meeting notices is to invite participants to the annual meeting. Because of the accountability requirements that annual meeting need to meet, notices generally are prescribed by state law and by the corporation’s bylaws. It is prudent upon the corporation to carefully deliver the notices of the annual meeting appropriately.

Corporate Resolutions

Corporation resolutions are formal actions and decisions approved by the Board of Directors. A corporate resolution is important because they tend to be vital to the continued existence of the corporation. Stakeholders may require them. An example is that most financial institutions want to see an executed corporate resolution authorizing an individual(s) to be able to sign checks, authorize a contract, or instituting a lease. Annual meetings for the Board of Directors tend to be the time when the corporation resolutions for the year are adopted such as bank signatures, etc.

Consent in Lieu of a Meeting

Some states allow an alternative way for directors to hold a meeting by a unanimous written consent in lieu of a meeting. This is a way for the directors to agree to all of the actions required by the agenda by signing the minutes of the meeting. For this reason, the minutes of the meeting are important as these minutes will be filed permanently in the minute book of the corporation. Generally any corporate resolution approved by unanimous written consent in lieu of a meeting must be signed by each director and kept with the corporation’s permanent records. In general, the consent also waives any notices required by law or corporate bylaw.

Good Minutes Practice

The minutes should include the date; time; location of the annual meeting; meeting participants; approval of prior minutes; record of action items in the meeting, any pertinent discussions, and actual votes; and corporate resolutions that were adopted. Also included in the minutes is the time the annual meeting formally ended and any follow up actions that need to be taken in the future. The reason that the minutes of the annual meeting, the organizational meeting, and special meetings are so important is they represent formal actions taken on behalf of the corporation. The minutes represent the accountability of the corporation to its stakeholders and the fiduciary responsibility of the directors and officers. Over time, the minutes are a historical record of the corporation. Minutes may be important in legal actions filed against, or on behalf of, the corporation.

Storing Corporate Records

Corporate records should be kept in hard copy in a formal file protected from any form of destruction including fire, water, aging, etc.

Conclusion

Annual meetings for the shareholders and Board of Directors are an important part of a corporation being accountable to its stakeholders. As a consequence, the minutes from annual meeting are important in that the minutes record the formal issues of the corporation permanently. The other purpose is that over time, minutes become part of the historical record of the corporation.