A basic requirement for corporations is to observe corporate formalities. This includes, but is not limited to, holding specific meetings and maintaining corporate records. A corporation is required to hold at least two specific meetings annually. One of the two required meetings is an annual board of director meeting. The second meeting is an annual shareholder meeting. Typically the bylaws provide when and where these two meetings are held. A corporation’s bylaws will also provide for how notices are given to directors and shareholders. Corporate minutes (or official notes) should be recorded detailing the events and business conducted.
The annual board of director meeting is convened with a minimum quorum of directors present. The business conducted at the annual board of director meeting is flexible, but typically will include an annual review of the corporation’s business for the past year as well as upcoming year, as well as a review and adjustments to executive compensation. All directors are required to receive notice of the annual director meeting, but not all directors are required to attend. The bylaws can specify the quorum requirement for these meetings, but the general default rule is that a majority of directors must be present.
Although not required, it is common to hold the annual director and annual shareholder meetings on the same day. The primary purpose of the annual shareholder meeting is for shareholders to exercise their right to vote and elect the board of directors for the upcoming year. In addition to electing board of directions, the annual shareholder meeting should typically include reports concerning the corporation’s financial performance over the past year, expectations for the upcoming year, industry trends, and other business concerning the corporation. All shareholders are required to receive notice of the annual director meeting, but not all directors are required to attend.
Other special meetings may be called by the board of directors or the corporations shareholders. Although, these special meetings are not required.
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