Shareholder Meetings
When was the last shareholders meeting you went to? should be "In January (or April, or July) this year."
Before doing anything about a meeting of shareholders, you should check your company's charter and by-laws. While Louisiana's business corporation act contains some specific requirements, the law also permits options or variations on some of those requirements to be included in a corporation's charter or by-laws.
In addition to annual meetings, there is also a need for special shareholder meetings from time to time. For example, while sales in the ordinary course of business are conducted by employees, when all or substantially all of a corporation's assets are being sold in a single transaction, approval for such must be given by the shareholders in order to be valid.
Other reasons might be contained in your company's charter, such as a charter requirement that only shareholders may approve corporate purchases of real estate or other capital expenditures.
Where should shareholders of corporations meet? Hopefully, this is a point about which your company charter is either silent, or simply repeats what the Louisiana statute says, which is: "Unless otherwise provided in the charter or by-laws, shareholders' meetings may be held anywhere in or outside of this state."
How should a meeting of shareholders be conducted? The meeting must be an event in which all shareholders come together at one place and time so that they can talk with each other face to face. In other words, it must be in a setting in which there can be simultaneous verbal interchange between people in the presence of each other.
While conference telephone call meetings are expressly authorized by Louisiana law for corporate board of director meetings, this method is not allowed for shareholder meetings. Even less valid is polling, for example by telephoning all shareholders for their vote on an issue, which is a procedure that is not authorized for director meetings, either.
If coming together for a meeting of all shareholders becomes impossible or impractical, the Louisiana corporate law provides a solution. It is called a shareholder written consent. The statute provides that whenever the affirmative vote of shareholders is required to authorize corporate action, the consent in writing signed by all of the shareholders " ... shall be sufficient ... without the necessity for a meeting of shareholders.'' Such a consent can be prepared and then delivered by mail or messenger to each shareholder for signing.
Careful adherence to mandatory corporate formalities will help assure your corporation will not be deemed by an I.R.S. agent in an audit, or a jury in a civil suit, to have ceased to exist, and will help assure it continues to be what you intend — a shield for you against personal liability for the company's debts. Annual shareholder meetings are well worth it for that reason alone.
Republished | Originally published on March 4, 2009
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Disclaimer: This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.