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Katten Muchin Rosenman LLP
For Presentation at July 13, 2010 Open Meeting of the Shareholder Forum
by Frank G. Zarb, Jr., workshop leader
Annual Meeting: The Basic Legal
Requirements vs. Market Standards**
The purpose of this memorandum is to summarize the basic legal requirements
that apply to a company's conduct of an annual meeting. State law provides
few detailed requirements, and as such expects that standards will develop
in the marketplace. An understanding of the legal requirements is a
necessary frame for the development of such standards.
Core Legal Requirements
The following are the core legal requirements that apply to a company's
conduct of an annual meeting, which are primarily derived from the company's
state of incorporation. State law provides companies with significant
discretion in determining how the meeting is to be conducted, reflecting
among other things a desire to discourage parties from attempting to use the
courts as a meeting referee. Indeed, most practitioners believe that
companies have wide discretion to conduct an orderly meeting, such as to
adopt and enforce a code of conduct for shareholders attending the meeting:
·
Provide adequate notice of meeting, and permit access to all
shareholders;
·
Provide physical location of meeting, absent state law
authorization to hold an entirely electronic meeting;
·
Quorum is required for meeting to proceed;
·
Record holders or other shareholders with proper authorization
(e.g, a valid proxy card) may vote at meeting prior to close of vote;
·
Company presents proposals on ballot including election of
directors, and any shareholder proposals in conformity with state law and
bylaws (including advance notice requirements) or Exchange Act Rule 14a-8.
·
Make shareholder list available for inspection (which may
include Internet posting in the case of an electronic-only meeting).
·
Comply with any procedural and other requirements set forth in
corporate bylaws, if any such requirements are established (may vary among
companies).
Not Legally Required
The following are some typical elements of a company's annual meeting that
are not generally compelled by law, unless specified in a particular
company's bylaws, though many of these elements are expected in the
marketplace.
·
Allow shareholders to ask questions or to make comments in
course of meeting;
·
Have officers or directors make any presentations, live or
taped;
·
Allow shareholders to propose proposals from the floor of the
meeting, or amendments, unless in conformity with state law and procedures
in bylaws (most companies require advance notice, and proposals must be
proper under state law);
·
Have any particular officers or directors in attendance, other
than those contemplated by the bylaws to administer the meeting;
·
Allow shareholders to voice points of order, unless perhaps
they would seek to enforce procedures established in the bylaws); or
·
Rules of conduct, which are not legally enforceable against
the company even if adopted by the company for the meeting unless they are
incorporated into bylaws.
July 10, 2010
Frank G. Zarb, Jr.
Katten Muchin Rosenman LLP
(202) 625-3613
frank.zarb@kattenlaw.com
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**
This is a summary only, and is not intended to provide detail as to legal
requirements or to provide any legal opinion or legal advice. |