Regular Corporate Meetings and Official Corporate Actions

It is important that your Corporation take regular actions by the shareholders and the directors as appropriate. Both the shareholders and directors should hold regular annual meetings. Directors should meet more frequently in order to maintain their responsibility of oversight over the corporation's affairs. Special meetings and actions should be taken either at a formal meeting or in writing as appropriate.

Our Small Business E-Book contains a number of forms and actions necessary for you to formally document the formalities of corporate meetings.

Shareholder Meetings

Annual Shareholder Actions. The shareholders of your corporation should take formal action at least annually, at an annual meeting or through an annual written consent action. In the annual action, the shareholders should, at a minimum, elect a new Board of Directors or reelect the current board of directors. If the corporation has shareholders that are not actively part of operating the business, the annual meeting can be used as a time to update the shareholders on the actions of the corporation during the preceding year and obtain their ratification of all actions that were taken during the year by the directors and the officers.

Special Shareholder Meetings. Generally, the corporate powers and actions are taken by the Directors, However, state law dictates that the shareholders take special action to approve certain fundamental corporate transactions and events such as (1) amending the Articles of incorporation, (2) sale of substantially all of the assets of the corporation, (3) approval of mergers and consolidations, and (4) corporate dissolution. Consult your state's corporation statutes to determine if there are any other transactions that require shareholder approval.

Director Meetings and Actions

The Board of Directors maintains control over the general operations of the corporation and must take a much more active role in supervising the operations of the corporation in order for the directors to meet their fiduciary responsibilities to the corporation.

Annual and Regular Director Meetings. At a bare minimum, your Board of Directors should meet at a regular annual meeting for the purpose of reviewing the corporation's affairs for the preceding year and reviewing and electing officers of the corporation. It is generally advisable for your corporation to formally meet and take action more frequently than annually. Many corporate Boards meet quarterly or monthly on a regular basis.

Special Director Actions. Your Board of Directors should remain actively involved in all major activities of the corporation and should take action to consider and approve ll major corporate activities and transactions The officers of the corporation should keep the directors advised concerning corporate affairs. The Board of Directors should be advised of an take action on all significant matters such as entering contracts, making expenditures, etc. For more on director actions, click here.

Following Proper Meeting Formalities

You must be certain to carefully follow corporate formalities in calling and holding any meeting of the shareholders or directors. You should refer to your Corporate Bylaws for the formalities that need to be followed when holding shareholder or director meetings or taking actions by written consent.

Generally, the formalities that need to be followed include: (1) calling the meeting by the proper person or persons, (2) properly notifying all shareholders or directors in the proper time frames prior to the meeting, (3) having each director or shareholder sign consents and waivers of notice of each meeting, (4) observance of proper meeting protocol such as obtaining a quorum to take action, roll calls, discussions ,formal motions, and proper voting procedures, and (5) properly documenting all of the actions of the shareholders and directors in your corporate book and records.

Actions By Written Consent

Most states now permit formal actions to be taken in writing without holding a formal meeting. Some states permit actions in writing to be taken by having a majority of the directors or shareholders execute a written consent action. Some states only permit written consent actions to be taken if all of the shareholders or directors execute the action and the action taken is unanimously agreed.

 

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