Corporate Annual Meetings: What Are They and Why You Must Hold and Document Them Correctly?

Corporate Annual Meetings: What They are and How to Hold and Document Them Correctly            

A corporation in Nevada is recommended to hold an annual meeting of its shareholders or members.  The meeting may be held anywhere, but must be held in the location and manner provided for in the articles of incorporation and/or bylaws of the corporation.  Unless otherwise provided in the articles of incorporation or bylaws, the entire board of directors, any two directors, or the president may call annual and special meetings of the shareholders and directors.  NRS 78.310.

While there is no statute specifically requiring an annual shareholders’ meeting, the law does allow shareholders owning at least 15% of the voting power to apply to the district court to order the election of directors if a corporation fails to hold a meeting within 18 months of its last meeting.  NRS 78.345(1).  Moreover, failure to hold annual meetings is one of the factors for allowing a court to pierce the corporate veil, determining that the corporation is a sham, and subjecting its shareholders to individual liability for the debts and wrongdoings of the corporation.  Obviously, shareholders should avoid that result.

Notice Requirements

If any action is required at an annual or other corporate meeting, each owner must be provided notice in writing.  NRS 78.370(1).  A copy of the notice must be “delivered personally, mailed postage prepaid or delivered as provided in NRS 75.150 to each stockholder of record entitled to vote at the meeting not less than 10 nor more than 60 days before the meeting.”  NRS 78.370(3).   If the notice is mailed, it must be directed to the stockholder at his address “as it appears on the records of the corporation.”  NRS 78.370(3).  Further, personal delivery of the notice to an officer of a corporation or association, any member of a limited liability company managed by its members, any manager of a limited liability company managed by managers, any general partner of a partnership, or any trustee of a trust, constitutes delivery of the notice.  NRS 78.370(3).

The notice for an annual meeting need not state the purpose for the meeting, but it must provide “the time when, and the place, which may be within or without this State, where the meeting is to be held”.  NRS 78.370(2).  The notice must also provide the means, including electronic communications, by which proxies may be deemed to appear in person.  NRS 78.370(2).

Quorum Requirements

Unless NRS Chapter 78, the articles of incorporation, or the bylaws of the corporation provide for different proportions, a “majority of the voting power, which includes the voting power that is present in person or by proxy, regardless of whether the proxy has authority to vote on all matters, constitutes a quorum for the transaction of business.”  NRS 78.320(1).  Also, and action by the shareholders “on a matter other than the election of directors is approved if the number of votes cast in favor of the action exceeds the number of votes cast in opposition to the action.”  NRS 78.320(1).

Unless otherwise provided in the articles of incorporation or the bylaws, any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting “if, before or after the action, a written consent is signed by shareholders holding at least a majority of the voting power, except that if a different proportion of voting power is required for this action at a meeting, then that proportion of written consents is required.”  NRS 78.320.