Corporation Meeting Requirements: Your Essential Guide
When you incorporate your business, you must meet specific corporate responsibilities to stay in good standing as an entity. One of them is to hold regular meetings, documented with minutes.
Corporation meeting requirements are different depending on the type of corporation and the state in which you incorporated it; state law and the corporation’s own bylaws set the rules by which the corporation holds valid meetings, takes proper actions, and keeps appropriate records and documentation.
However, it is essential for any corporation or similar structure to have some type of meeting rules in place — and not just because of state laws.
Corporations often serve the purpose of protecting shareholders from liability. If the corporation does not follow formalities, the corporate veil can be easily “pierced” by a court, resulting in personal liability for the shareholders.
Furthermore, an organization risks its legal standing if it fails to hold corporate meetings documented by the corporation’s minutes. But corporations also have a fiduciary responsibility to establish and follow meeting rules.
They help ensure that your company is operating legally and responsibly. As a result, they protect your organization’s stakeholders and limit liability related to possible negligence by directors or officers.
To discover more about general meeting requirements for all corporations and corporations with a single shareholder, two shareholders, or three or more shareholders, continue reading.
Are shareholder meetings required?
Shareholder meetings are a regulatory requirement for both public and private companies. That means your corporation must prove that it has met the standard for holding documented corporate meetings at any point in its history.
Corporation law does vary by state, and different corporations have different bylaws and processes. Nevertheless, the general concepts of properly calling a meeting, giving adequate notice, and correctly recording corporate actions are often the same.
Use the following information as a basic guideline, not a guarantee of compliance with state law and your corporation’s bylaws.
If you are unsure of the meeting requirements for your corporation, the best thing to do is consult with your state government. They are the ultimate authority in such matters and will be able to provide the most up-to-date information.
That said, let’s take a high-level look at some general guidelines that are likely to apply in your case before diving down into greater specificity.
Corporation Meeting Requirements: An Overview
To remain in good standing as a corporation, you must meet the following standards:
- Hold meetings at least annually.
- Give notice to all shareholders of the date, time, and place of meeting (or retain a signed waiver of notice. (States often have specific requirements regarding the timing of these notices, but a good rule of thumb is to send them more than ten but less than sixty days before the meeting date.)
- Prepare minutes of the meeting, including the following.
- The name of the corporation.
- The date, time, and place where you held the meeting.
- That meeting notice had been properly given or waived under the bylaws.
- Record of shareholders present and absent.
- That you presented and approved the minutes of the previous meeting.
- Any significant changes to the business that happened during the year.
- Election of officers (by the action of the board of directors) and directors (by a vote of the shareholders) according to the corporation’s bylaws and articles of incorporation, if specified, elections should occur annually.
- Any other basic information covered and decisions made.
Small to medium-sized corporations often have a board of directors composed of the corporation’s shareholders. A corporation must have both groups to operate legally; however, you may combine the annual meeting requirements for both groups into one session if the members of both groups are the same people in your corporation. You need to ensure that your meeting minutes reflect that the meeting was a joint assembly of the shareholders and the board of directors.
Single Shareholder Requirements
It may surprise you to learn that even if you are your company’s sole shareholder, director, and officer, the law still requires you to hold regular meetings. However, even as a one-person show, you are obligated to do things by the book. This can have advantages for you and your corporation, protecting you from personal liability and keeping your company in good standing.
Requirements for meeting minutes are relatively simple for one shareholder corporation. Use the general requirements as a guideline and also consider the following information.
- Set a meeting date (this can be a past date since there is no need to give notice to oneself) to be held at least once annually.
- Record in the minutes that the meeting is a joint meeting of the shareholders and the board of directors.
- Record in the minutes the election of directors and the election of officers (president, secretary, treasurer) for the next year (if indicated as necessary in the corporate bylaws).
- Sign the minutes as the secretary of the corporation and retain copies with other business documents.
Remember, even if it seems arbitrary for your single shareholder corporation, you must still adhere to meeting requirements to retain corporation status.
Corporate Meeting Requirements for Two Shareholders
If there are two shareholders, both are on the board of directors, and you must designate one person as the secretary of the corporation. Use the general requirements as a guideline and also consider the following information.
- Set a date of the annual meeting (if the shareholders meet often, it could be a past date with a signed waiver of notice) to be held at least once annually.
- Record in the minutes that the two shareholders are present and that it is a joint meeting of the shareholders and the board of directors.
- Record in the minutes the election of officers (president, secretary, treasurer) and directors for the next year (if indicated as necessary in the corporate bylaws).
- The secretary of the corporation signs the minutes and retains copies along with other business documents.
Three or More Shareholders
There is a more significant potential for disagreements when there are more than two shareholders. You should ensure that your company adheres to corporate formalities so that one individual cannot later contend a meeting (and any decision made at that meeting) was invalid due to inadequate notice or non-attendance. Use the general requirements as a guideline and also consider the following information.
- The president, board chair, or secretary calls the meeting and gives adequate notice. State corporation law and corporation bylaws establish how many days notice you must provide for certain types of meetings.
- Set a meeting date and give all shareholders adequate notice of the date, time, and place. (State corporation law may allow a valid meeting if all who are entitled to vote attend or all who do not attend, sign a waiver of notice.)
- For a valid meeting, a quorum must be present. The articles of incorporation, bylaws, and state corporation law establish the quorum. Generally, it consists of a majority of the shares (or directors) entitled to vote.
- Record the type of meeting (meeting of shareholders, meeting of the board of directors, or joint meeting) in the minutes, and the shareholders in attendance and absent.
- Record in the minutes any actions taken or resolutions passed and the vote in favor of each.
- Record in the minutes the election of officers (president, secretary, treasurer) and directors for the next year (if indicated as necessary in the corporation bylaws).
- The secretary of the corporation signs the minutes and retains copies along with other business documents.
The Bottom Line
Adhering to corporate meeting requirements as defined by state law and your corporation’s bylaws is crucial to your business’s continued existence. Failure to do so could lead to severe consequences, such as dissolution or personal liability for individual shareholders.
So before you call your next meeting, make sure you’re following the proper procedures and meeting requirements.
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