How often your corporation must hold a shareholder meeting and how often it should hold one are two entirely different situations. How often you must hold a shareholder meeting depends on several factors, including the following:
- Your Articles of Incorporation
- Your bylaws
- Your shareholders’ agreement
- The requirements of your state
Many states require a corporation to hold an annual meeting. As a professional from Kaplan Law Practice, LLC can attest to, speaking to a business lawyer can help you understand more details regarding these rules.
Most states also require a corporation to take and keep minutes of its shareholders’ meetings that contain information such as the following:
- The date and time of the meeting, as well as the location where it took place
- A list of which shareholders attended and which didn’t
- The meeting’s agenda items
- Record of what topics and matters was discussed
- The results of any votes taken
- The time when the meeting adjourned
Usually, your corporation’s secretary takes these minutes and, after they’re approved by your board of directors, signs them and places them in your official corporate records. Once approved and signed, minutes can’t be updated in terms of correcting them. If someone subsequently discovers a serious error in them, they can be corrected by means of a motion to amend at a later meeting.
Which brings up the real question: how often should you hold shareholder meetings? Your corporation is free to hold one whenever it desires or the need arises, as long as it gives proper notice of each one. While correcting a prior set of minutes probably does not rise to the level of requiring a special meeting, such actions or proposed actions as the following do:
- Changing the number of directors your corporation has
- Adding or dismissing members from your board of directors
- Proposing to sell all or most of your corporation’s assets
Other types of meetings your corporation likely will hold include board of directors’ meetings and committee meetings. Minutes should likewise be taken at all of these meetings.
The minutes of your corporation’s various meetings become an ongoing record of the corporation and its operation. As such, they serve to maintain your corporation’s legal status and your shareholders’ personal liability protection. They may also help the corporation gain or maintain a favorable tax status. A business lawyer can help you learn more about these matters.
Consequently, it’s a good business practice to keep all your corporate records, including the minutes of its meetings, for at least seven years. You will need them if the IRS decides to audit the corporation or if a shareholder, board member or officer makes a reasonable request to review them.