Shareholders Meetings in a Corporation?
By Lane V. Erickson, Idaho Business Attorney
When it comes to choosing an entity for your business organization in Idaho there are several options. In previous articles we have discussed LLCs and partnerships in detail. Today we’re going to focus on a regular corporation entity and some of the things that are unique when a corporation exists. More specifically, this article is going to focus on shareholders meetings in a corporation.
Our Idaho business attorneys at Racine Olson are premier in their knowledge and skill. We use this experience to help each of our business clients create, organize, and operate their business in Idaho. Our team of Idaho business lawyers includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Our attorneys have decades of experience, knowledge, and skill in helping business clients deal with all of their business needs and in helping move our client’s businesses forward.
The focus of today’s articles is to deal with shareholders meetings in a corporation. To do this, we will start by talking about when shareholder meetings are held. Secondly, we will discuss how a shareholders meeting is scheduled and finally what actually happens at a shareholders meeting.
Keep in mind that this article is just a starting place. If you have specific questions or concerns, we encourage you to contact us for a free 30-minute consultation where we can answer your questions and help you with your specific business needs.When are Shareholders Meetings Held?
As mentioned above, the first question is when are shareholders meetings held? The answer to this question is controlled by the statutes in Idaho. Specifically, these statutes are: Idaho Code §§ 30-29-701, 702, and 703.
Section 701 of the Idaho Code provides specific directions about annual meetings that are held for shareholders. This section says specifically that “unless the directors of the corporation are elected by a written consent in lieu of an annual meeting a corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws . . ..”
Notice the use of the term “shall”. When talking about statutes, the use of this term simply means that it has to happen. In other words, there is no discretion or choice amongst the owners about whether this kind of meeting does happen. Rather, the statutes say that an annual meeting has to happen at least once every year.
It is important to understand that the statutes do not say when in the year this annual meeting will be held. Usually that information is contained in the bylaws itself. For instance, some bylaws for a corporation may say that the annual meeting will be held on the second Tuesday of every April. Alternatively, any other date or time in the calendar year could be chosen for when this annual meeting occurs. It really doesn’t matter what date is chosen so long as it is a consistent date that is done every year.
In addition to the annual meeting the Idaho Code §§ 702 and 703 state that there can be special meetings that are scheduled and that a court could also order a meeting of the shareholders to occur.
Additionally, the location really isn’t that important either. The only limitation on location is that it has to be a place where the shareholders themselves can attend either in person or remotely. So, for instance, a corporation cannot state that the meeting will be held in Switzerland every year, and that shareholders must attend in person, if it’s obvious that none of the shareholders can afford to travel to Switzerland for the meeting. If that’s the case, then the corporation has to schedule the annual meeting to occur in a location or through technology that would allow the shareholders to attend and participate.How are Shareholders Meetings Scheduled?
When it comes to any meetings that are scheduled, the corporation has to provide notice to the shareholders. The purpose of giving notice is obvious. The shareholders need to have time to schedule to attend the meeting so that they can participate in the business that takes place in the meeting.
Statutes in Idaho require that the notice of the meeting provide information and details about the date, time, and place of each annual or special meeting. More particularly, Idaho Code § 30-29-705 states specifically that the notice of any meeting that is called for shareholders has to be given to the shareholders not less than 10 days and not more than 60 days before the meeting date. The notice has to be in writing and has to be sent to each shareholder individually at their last known address or in any other way the shareholder requests. This could include by email or by fax.
Finally, the written notice has to provide information about how the shareholders can attend and participate. Usually, these meetings are done in person. However, with recent technologies, many of these meetings are now held remotely through video conferencing, or conference phone calls.What Happens at Shareholders Meetings?
The statutes state that the written notices that are given to the shareholders for annual meetings do not have to state any specific purpose for the meeting. However, if a special meeting is called, the statutes require that the written notice of the meeting provide a description of the purpose of the meeting. In other words, the notice of the meeting has to state why the meeting is being called as well as any action that is being proposed. Again, this gives each of the shareholders the ability to determine how they will participate in the meeting.
The purpose of an annual meeting is to give the shareholders the ability to vote on who the directors of the corporation will be. The bylaws control who the directors are, how they are chosen, and how long their terms last. Typically, directors don’t all have the same term. The reason for this is so that new directors can constantly be put on the board of directors for a corporation.
A special meeting can be called for any business purpose. This simply means that either the shareholders themselves, or the directors of the corporation can call the meeting so long as it is done in accordance with both the by-laws of the corporation and the applicable statutes. In the notice for this meeting the person or group who called the meeting will describe the reason the meeting is being called.
If your business entity is a corporation, or you are considering creating a corporation to operate your business, we can help. We have assisted numerous clients in the creation and operation of their Idaho corporations. We have also assisted many clients with corporations created outside of Idaho but that operate within the state of Idaho. We are confident that we can help you too!Enlist an Idaho Business Attorney to Help You
Our team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.