What is an Annual Shareholder Meeting?
Once a year, as required by state law, corporations have annual shareholder meetings. The primary purpose of these meetings is to elect the corporation’s board of directors for the next year; however, other important issues may also be addressed, and other votes taken. The date of the annual meeting is usually contained in the corporation’s bylaws.
Because the date is contained in the bylaws, a corporation generally is not required to give you formal notice of the next annual meeting. However, in practice, most corporations do provide reminders to their shareholders. Moreover, many publicly-traded corporations fall under a federal regulation requiring them to provide a proxy statement to shareholders before each annual meeting.
Annual meetings are often scheduled shortly after the end of a corporation’s fiscal year. This is a particularly useful time for the shareholders to discuss the corporation’s financial performance. (Of course, shareholders are likely to discuss financial performance regardless of when the annual meeting takes place.) Also, for the sake of efficiency, annual shareholder meetings are often scheduled on the same day as the annual meeting of the corporation directors, with the directors meeting usually held just after the shareholders meeting.
Any vote taken at a shareholders meeting is valid only if a quorum of shareholders is present. The quorum requirement ensures that a minority of shareholders are not able to improperly exercise control over corporation decision-making. The number of shareholders that constitute a quorum is defined by state law; most states require that more than 50% of the shares be represented at the meeting in order for there to be a quorum. Be aware, however, that some corporations impose a greater quorum requirement through their bylaws.
You can appear at an annual meeting “by proxy.” This means that you authorize someone else to attend the meeting and vote your shares on your behalf. The details of proxy voting are laid out in each state’s corporation laws; additional proxy voting rules may also be contained in the corporation’s bylaws. If you want someone to vote your shares by proxy, you probably will have to complete a special authorization form.
As a final point, be aware that annual meetings must be recorded by a corporate secretary. The secretary will create minutes of what happened at the meeting, including when and where the meeting took place, who attended, and any significant actions or decisions. The minutes are kept in a corporate record book.