Business Lawyers in Columbus, Ohio
By Drew Stevens - August 24, 2019 - Corporate & Business
Yes, depending on your state and your incorporation documents.
In the interest of not writing the world’s briefest answer as to whether your corporation needs an annual shareholder meeting, here we’ll explore some of the requirements of the annual shareholder meeting.
Before we get into meeting requirements though, we’ll tackle some brief myth debunking. It does not matter if you’re a startup or an established business. It does not matter if your corporation is public or private. Finally, it does not matter if you have 10 shareholders or 100 shareholders.
Generally, if your state law says that your corporation must have an annual meeting of the shareholders, a meeting you shall have.
If your company doesn’t have its own Columbus business attorney to tell you otherwise, a common misconception can be that annual shareholder meetings are only for large, publicly-traded companies. This is not true. Even the smallest of corporations can be required to have an annual shareholder meeting.
The mechanics and requirements of the annual shareholder meeting are outlined in your applicable state’s corporate law. If your corporation is incorporated in Ohio, section 1701.39 of Ohio Revised Code states the requirements for the annual shareholder meeting.
If you have a Delaware corporation, the requirement for the annual shareholder meeting is found in section 211 of the Delaware General Corporation Law.
The itinerary for your corporation’s annual shareholder meeting will depend on your state law and your code of regulations, bylaws, articles of incorporation, or certificate of incorporation.
Usually, the primary purpose of the annual shareholder meeting is for the shareholders to elect or reelect the board of directors, but this does not have to be the sole topic. For example, in Delaware, “any other proper business” can occur at the annual meeting under DGCL section 211.
In Ohio, Ohio corporate law specifically references electing directors and presenting the shareholders with financial statements including a balance sheet and profit and loss statement, under ORC sections 1701.39 and 1701.38.
Other common actions and topics that are addressed at corporate shareholder meetings include voting on shareholder proposals, approving of certain transactions (think significant acquisitions, significant financing, mergers, or selling a business), and removal of and replacing directors.
The procedures for giving notice of the annual shareholder meeting also depend on your state law and your corporate documents. With Delaware corporations, under DGCL section 222, you must send written notice of the location of the meeting, if any; the date and time of the meeting; the means of remote communication, if any; and the record date for determining the stockholders who are entitled to vote at the meeting. Generally, written notice of the meeting should not be given less than 10 days but not greater than 60 days.
If your corporation is domiciled in Ohio, the general requirements for notice can be found in ORC section 1701.41. The written notice must state the time and location, if any; the purpose of the meeting; and the means, if any, by which shareholders can be present and vote. Notice, under Ohio corporate law, should be given not less than 7 days and not more than 60 days ahead of time. A good Columbus business law lawyer can help prepare a standard notice that you can use for years to come.
Prior to sending notice of the annual shareholders meeting, be sure to check your state’s corporate code or your company’s corporate documents. There may be additional requirements that your corporation needs to observe. For example, with Delaware corporate law under DGCL section 219, the corporation, generally, must prepare a complete list of stockholders entitled to vote at the applicable meeting at least 10 days before said meeting. Corporate, Partnership, and Derivative Litigation Ohio
Adhering to corporate formalities and meeting state-specific corporate governance requirements can be tricky. If you feel that you need the assistance of an experienced business law attorney in Columbus, Ohio, contact one of our business lawyers today.