The Importance of Sending Out Proper Notices of Shareholder Meetings
Shareholder meetings are required for San Diego and California corporations. Annual meetings are generally set for a certain time and place in the corporation’s bylaws. Even with the annual shareholder meeting, which is set by the bylaws, a written notice must be sent to the shareholders informing/reminding them of the meeting. “Special” shareholder meetings can also be called, which are different and distinct from the annual meeting. Such “special” meetings must be called properly and notice must be given. An experienced San Diego corporate attorney can help ensure that your meetings are properly noticed and properly held. If there is a failure in the notice and if there is a dispute that leads to litigation, there is a potential that a California judge might invalidate the actions taken at the meeting. Here are a few important things to know about sending out notice of shareholder meetings.
What Should be in the Notice?
In general, the notice should state:
- Time of meeting
- General statement of the issues to be discussed voted on — for meetings at which board members are to be elected, the best practice is to list the candidates; failure to list the issues to be voted on can invalidate any vote on that issue; see Corp. Code, § 601(a) (the notice must state “… the general nature of the business to be transacted, and no other business may be transacted …”)
- Participation rules — in-person only, via telephone, etc.
The notice must be in writing and should be delivered as provided in the bylaws. Many bylaws will provide alternative forms of delivery such as US mail, email, facsimile, and similar. Furthermore, some bylaws require a form of delivery that can be tracked and proven such as US mail, return receipt requested. Finally, some newer bylaw notice provisions are allowing notice via text-messaging. The key is that delivery must be accomplished in the manner set out in your bylaws. In the absence of bylaw provisions, notice by mail or email is acceptable.
The written notice must be given at least 10 days before the meeting.
Can Notice be Waived?
Yes. And truthfully, with many small, closely held corporations, the notices can be waived by the shareholders and that waiver is generally filed with the minutes from that meeting. If there is no dissent, the shareholders can all sign a waiver of the notice requirement and then there can be no challenge to the actions taken at the meeting.
What About Board Meetings?
A similar set of rules applies to meetings of the board of directors. A board may have preset meetings such as monthly, quarterly, etc. Boards may also call special meetings. Proper written notices are required for those meetings, too.
Contact San Diego Corporate Law Today
For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard provides a full panoply of legal services for businesses and corporations including corporate formation, annual maintenance, custom-drafting of articles and bylaws, corporate minute taking and preparation, and all related corporation legal needs. Mr. Leonard can be reached at (858) 483-9200 or via email. Like us on Facebook