How often do shareholders need to meet? This is among one of the most commonly asked questions from new business owners. The truth is, it depends, but it is typical for a corporation to hold several required formal meetings annually. The shareholders meeting is where corporation shareholders gather to not only discuss important company issues, but also to vote on them. You may sometimes hear the annual corporate shareholder meeting referred to as the ”stockholder meeting” or the “general meeting.” Let’s take a look at what Pennsylvania law requires in the way of shareholder meetings.
How Often Should Corporate Shareholders Meet?
Typically held at the end of a corporation’s fiscal year, a corporation’s shareholder meeting is often held back to back with the corporation’s directors meeting. In many cases, the time and location of these meetings will be set forth in the bylaws of the corporation. Shareholder meetings can be critical in making sure a corporation is running smoothly and following proper protocol such as seeking shareholder approval for a number of important business decisions. Among other issues discussed and votes that take place, one of the biggest things that is handled at a corporation’s annual shareholder meeting is the appointment or removal of Board of Directors members. Other agenda items may include voting on shareholder initiatives. These initiatives can include everything from mergers to other financial transactions that would need shareholder approval.
How often should corporate shareholders meet? Well, how often shareholders must meet depends on whether the issue is addressed in the corporation’s articles of incorporation or bylaws. You see, Pennsylvania’s corporation laws dictate that corporate shareholder must meet at least once per calendar year. In fact, Pennsylvania corporate laws Section 1755 of Title 15, Chapter 17, Subchapter E states:
“Regular meetings.-The bylaws of a business corporation may provide for the number and the time of meetings of shareholders. Except as otherwise provided in the articles, at least one meeting of the shareholders shall be held in each calendar year for the election of directors at such time as shall be provided in or fixed pursuant to authority granted by the bylaws.”
This means that shareholders must meet at least once a year unless the articles of incorporation or bylaws of the corporation state otherwise. Sometimes, a corporation may have such a small number of shareholders that they may choose to do things like elect a board of directors members by written consent, instead of opting to hold a formal meeting. To allow for this option, you should consider incorporating a written consent provision in the bylaws of your corporation. If you don’t, then you may have to hold an annual meeting to accomplish such tasks and comply with the necessary formalities required of such meetings.
Meeting minutes are required for shareholder meetings. These minutes act as a record to show that the corporation has fulfilled its legal obligations. It also provides details regarding any decisions made at the meeting. Meetings are actually required in all corporate meetings, not just shareholder meetings.