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San Diego Corporate Formalities: Proper Notice of Meetings of Shareholders and Directors
Under California law, corporations are required to have an annual meeting of shareholders and to hold regular meetings of the board of directors. In this article, we discuss the importance of proper notice of the respective meetings.
San Diego Corporate Law: What is a Notice?
In general, a notice for a meeting of the board or shareholders contains the following components:
- A communication — such as a letter, email or phone call
- Sent by the method allowed/required in the statute
- Sent within the time period allowed/required
- That states the place, time and date AND, for shareholder meetings that
- Specifies the general PURPOSE of the meeting of shareholders.
San Diego Corporate Law: Proper Notice of Meetings of Shareholders
Cal. Corp. Code § 600 et seq. governs meetings of shareholders. Regular annual meetings of shareholders are to be listed in the bylaws which shall provide for the date, time, and place. Section 600(b) specifically states that the “… annual meeting of shareholders shall be held for the election of directors” and allows that “[a]ny other proper business may be transacted at the annual meeting.” With respect to special meetings of shareholders, subsection (d) states that these meetings may be called by:
- The board
- Chairperson of the board
- President
- Holders of shares entitled to cast not less than 10% of the votes at the meeting
- Any additional persons as may be provided in the articles or bylaws
Generally speaking, in terms of how much advance notice is required, Section 601 requires that 10 days advance notice must be given if sent by regular mail; 30 days advance notice if third class mail is used; and the notice shall not be sent more than 60 days prior to the shareholders’ meeting.
Importantly, a general purpose must be listed on the notices for shareholder meetings. Section 601(a) states that for a special meeting, the notice must state “… the general nature of the business to be transacted, and no other business may be transacted …” For the annual meeting of shareholders, the notice must state “… those matters that the board … intends to present for action by the shareholders …” Further, the notice of any meeting, regular or special, at which directors are to be elected shall include the names of nominees intended at the time of the notice to be presented for election.
Subsection (f) states that, unless there is unanimous agreement, any action taken is voidable by a court with respect to some purpose NOT listed on the notice. See also Le v. Pham, 180 Cal. App. 4th 1201 (2010).
San Diego Corporate Law: Proper Notice of Board Meetings
Cal. Corp. Code § 300, et seq. governs what notice is required for meetings of the Board of Directors.
In general, as long as the place and time are set, regular board meetings that are set out the bylaws require no notice. Thus, if your corporation’s bylaws provide for regular board meeting on, say, the first Tuesday of every other month, then no notice of the meeting is required. Special meetings may be called by the following;
- Chairperson of the board
- President
- Any vice president
- Secretary
- Any two directors
For special meetings, four days’ advance notice must be given if sent by mail or 48 hours’ advance notice can be given if the notice is delivered personally or by telephone, including a voice messaging system or by electronic transmission by the corporation. Importantly, the notice need not specify a purpose for the special meeting.
Note that the articles or bylaws may not dispense with notice of a special meeting. However, directors may waive notice in advance or after the fact, may waive improper notice by attending the meeting without protest, and/or ratify the actions taken by various acts including approving the minutes of the meeting in writing.
Call San Diego Corporate Law Today
For further information on sending proper notices of meetings, please contact Michael Leonard, Esq. of San Diego Corporate Law. Mr. Leonard has the experience to set up your corporation, review your bylaws and articles, draft minutes, and help ensure that your corporation remains in good standing. Call Mr. Leonard today. He can be reached at (858) 483-9200 or via email.
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