The Annual Corporate Throwdown…I Mean…Meeting!

As an attorney fresh out of law school, I am all too familiar with the confusion and difficulty involved with starting something new, familiarizing yourself, and applying the intricate rules and procedures of whatever that new thing may be.  

For all the business newbies out there, today is your lucky day. Have you been banging your head over the thorny requirements for operating a corporation? Fortunately for you, I have been, too. So I am here to clarify a few things on the topic of annual shareholder meetings.  

To start, let us address what an annual shareholder meeting even is. Honestly, the name is pretty self-explanatory. It is a meeting of all the shareholders, held once each year, to discuss issues important to the operation of the corporation. Annual meetings are typically held at the end of a corporation’s fiscal year. They are also often held on the same day as the annual meeting for the board of directors. Scheduling your meetings this way can save time and energy for the shareholders, the board of directors, and the corporation in general.  

The main reason these meetings are held is to provide a time and place for the shareholders of the corporation to vote on a new board of directors. For smaller corporations, where the shareholders and board of directors are comprised of the same people, this may simply be a formality. Shareholders use these meetings to vote on and address significant issues that will be faced by the corporation in the upcoming year. The annual meeting also provides the shareholders with the opportunity to review and discuss the corporation’s financial performance for the previous fiscal year.  

An important question you may be asking yourself is why your corporation needs to hold an annual meeting. The simple answer to that question, is that it is required by law to do so. Wis. Stat. § 180.0701, requires that “a corporation shall hold a meeting of shareholders annually at a time stated in or fixed in accordance with the bylaws.” This means that it is important for your corporation’s bylaws to specify when, where, and how the shareholders should meet each year. Your bylaws may authorize your board of directors the exclusive discretion to hold annual meetings remotely, which can be beneficial in times like these. There are limited exceptions to these requirements for investment companies that can be found in Wis. Stat. § 180.0701(4). 

Shareholders, like the rest of us, may be overwhelmed with their everyday lives and schedules. It is easy to forget the details of a meeting without a reminder. Thus, it is helpful and important to give adequate notice to your shareholders of the details (time, date, place) of the meeting. In addition to being a courtesy to your shareholders, formal notice may also protect the corporation from complaints and lawsuits arising out of a shareholder missing the meeting. That being said, it is not the end of the world if a shareholder misses a meeting. Most states, including Wisconsin, only require a quorum of 50% of the shareholders to be present for the meeting to proceed, unless your corporation’s bylaws state otherwise.  Shareholders may also authorize someone else to attend and vote on their behalf at the annual meeting by proxy. Again, this may be altered through your corporation’s bylaws.  

If you or your shareholders are anything like me, then they will appreciate a written record of what happened at the meeting. This written record is commonly referred to as meeting minutes. Meeting minutes document the most important aspects of the meeting including what occurred, who attended, and where and when the meeting took place. Not keeping these crucial meeting minutes could put you and your shareholders at risk.  

That’s it for my quick rundown on annual shareholder meetings. Hopefully this eases some of your confusion and head banging.