Shareholders' Meetings

Every state requires a corporation to have an annual (or regular) shareholders' meeting. This meeting is necessary to elect the Board of Directors and to conduct other regular business (annual reports). Generally, the bylaws specify the timing and location of the annual meetings. Beyond an annual shareholders' meeting, special shareholders' meetings can also be called for extraordinary actions (i.e. mergers, conversions, etc.) by the Board of Directors.

Notice regarding these meetings is imperative, but state laws generally have basic requirements for notice. For annual shareholders' meetings, notice only requires the date, time, and place of the meeting. For special meetings, the purpose of the meeting should be specified within the notice. Generally, notice should be given at least 10 days, but no more than 60 days before a meeting. All voting shareholders must be given notice, but not all shareholders must be present for the meetings. Generally, states give a default quorum requirement of a majority of voting shareholders. However, states do allow corporations to specify within their bylaws their own quorum requirement. Some states do have a minimum (e.g., Delaware allows quorums to be reduced up to one-third of voting shareholders), but other states have no limitations on how many shareholders must be present.

During these meetings, the chair presents different agenda items and the shareholders vote. Agenda items could include appointing directors to the board, removing directors, voting on shareholder initiatives, and board-initiated transactions that require shareholder approval (i.e. mergers, sale of assets, or dissolution). Voting requirements for each of these actions may differ and so each corporation should look to its state to determine the minimum number of votes required for the approval of any action.

Board of Directors' Meetings

The board of directors is responsible for the management of the corporation and so its meetings revolve around that purpose. Typically, directors establish broad policies and objectives for the organization of the corporation; select, support, and review the performance of the chief executive; ensure the adequacy of financial resources; approve the annual budget; assessing to its stakeholders on the corporation's performance; and set its own salary and compensation. Actions that make a fundamental change to the corporation (i.e. mergers, conversions, dissolutions) generally require subsequent shareholder approval. All directors should be notified of any meeting, but not all directors are required to be present at these meetings. The bylaws can specify the quorum requirement for these meetings, but the general default rule is that a majority of directors must be present. For larger corporations (e.g., publicly traded corporation), greater state and federal scrutiny is given. Federal regulation requires greater accountability for various activities conducted by the board. At this point, professional assistance is a necessity.

Minutes

Minutes are an essential part to any meeting and are used as an official account of the decisions made during a board/shareholder meeting. With that said, minutes should remain light. Only information of substance should be included, while extensive details on what was presented excluded. The minutes should also include basic information date, time, and place) as well as the people in attendance (if attendees arrive late or leave early, the minutes should state when an attendee arrived or left with a special note). The agenda items for the meetings, and any voting actions (whether approved or not) should be listed within the minutes. Agenda items should include a brief description of each item, but comments on each agenda item are unnecessary, unless specified by the commentator to be included within the minutes. Voting actions should detail the voting results, including the manner in which individuals voted. Adjournment of a meeting should also be included with the time of adjournment should be listed. Because minutes are used as official documents, participants should be given an opportunity to amend the minutes before making them official.

Learn more about the steps you need to take after you form your business.

My U.S Inc. has helped thousands of entrepreneurs form their own limited liability companies and corporations, and we've noticed that when everything is filed and finished, one of the most common questions we are asked is 'so now what?' Maintenance and filings don't end after your formation, but the process of getting your new entity compliant and ready for business can be broken down into five simple steps.

Step 1:

Apply for an Employer Identification Number. You are going to need one to hire employees or open up a bank account for your business.

Step 2:

Begin working to protect your brand. File for trademark protection and don't forget to buy a domain name as soon as possible.

Step 3:

Find out what business licenses are required by your state or city. Business licensing varies depending on entity type, location, and industry, so be sure to consult with a professional who can help you pin down exactly what you need.

Step 4:

Stay on top of your annual maintenance. Most states require that corporations and LLCs File an annual report, which will discloses basic information like your business's name, its address, and its registered agent. You also need to document any changes in the corporation or LLC - for example, if you brought on new owners or investors. Make sure that you also update your operating agreement or bylaws too as new partners, members, and investors will usually want a say in how the company is run.

Step 5:

If you plan to expand your business outside of its home state, remember that no matter where you go, you are always going to have to apply for permission to do business there. If you don't, you could be facing some hefty fines, so remember to file to qualify as a foreign entity in any state you want to do business in.

Here at My U.S Inc., we're happy to help you with any and all of the above steps, so you can focus on what is important - running your business. Just call our specialist representatives at 1.0000000000 and we will help ensure your LLC or Corporation is compliant, maintained, and ready for business.