Requirements for Valid Action at a Shareholder Meeting
* Read statute, bylaws and articles
* 1. Authority for the meeting
* 2. Proper notice (or waiver of notice)
* 3. Quorum
* 4. Required number of votes cast in favor
1. Authority for Meeting
* The meeting must be authorized
* Look to statute and bylaws for authorization
* Annual meetings MBCA §7.01
* Special meetings MBCA § 7.02
* Court ordered meetings MBCA § 7.03
* Who may call a special shareholders meeting?
2. Proper Notice
* See MBCA § 7.05; Del. § 222
* a) Must the meeting notice state the purpose of the meeting? * Annual meeting MBCA § 7.05(b)
* Special meeting MBCA § 7.05(c)
* NOTE: A number of provisions in the applicable corporation statute will contain special notice provisions. See, e.g., MBCA §10.03(d) * b) Who is entitled to notice?
* generally only shareholders entitled to vote MBCA § 7.05(a) * only shareholders on record date MBCA § 7.07; Del. § 213 * Note: In some cases shareholder who are not entitled to vote are entitled to notice. See, e.g., MBCA §§ 10.03(d) & 11.04(d). * c) What about electronic notice?
* See MBCA § 1.41(c); Del. § 232
* d) Can notice be waived?
* Notice (or a defect in a notice) may be waived expressly or by participation in the meeting. See MBCA § 7.06; Del. § 229 * e) What notice is required in the case of an adjourned meeting? * See MBCA § 7.05(e)
3. Quorum Requirement
* See MBCA § 7.25(a); Del. § 216
* a) Can a greater or lesser quorum be authorized?
* See MBCA § 7.27. The articles of incorporation may provide for a greater than majority quorum * See MBCA § 7.25 Official Comment 5 (lesser quorum) * Compare Del. § 216, which also permits the bylaws to vary the quorum requirement * Why would a corporation permit a...
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