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See also

Agenda for July 13, 2010 Open Meeting

To Be Decided: Standards for Fair Conduct of Investor Communications


Mr. Zarb, the workshop leader who presented the special project report below, is also a member of the Program Panel for the Forum's E-Meetings program.



Katten Muchin Rosenman LLP


For Presentation at July 13, 2010 Open Meeting of the Shareholder Forum

by Frank G. Zarb, Jr., workshop leader


Annual Meeting:  The Basic Legal Requirements vs. Market Standards**

The purpose of this memorandum is to summarize the basic legal requirements that apply to a company's conduct of an annual meeting.  State law provides few detailed requirements, and as such expects that standards will develop in the marketplace.  An understanding of the legal requirements is a necessary frame for the development of such standards. 

Core Legal Requirements

The following are the core legal requirements that apply to a company's conduct of an annual meeting, which are primarily derived from the company's state of incorporation.  State law provides companies with significant discretion in determining how the meeting is to be conducted, reflecting among other things a desire to discourage parties from attempting to use the courts as a meeting referee.   Indeed, most practitioners believe that companies have wide discretion to conduct an orderly meeting, such as to adopt and enforce a code of conduct for shareholders attending the meeting: 

·        Provide adequate notice of meeting, and permit access to all shareholders;

·        Provide physical location of meeting, absent state law authorization to hold an entirely electronic meeting;

·        Quorum is required for meeting to proceed;

·        Record holders or other shareholders with proper authorization (e.g, a valid proxy card) may vote at meeting prior to close of vote;

·        Company presents proposals on ballot including election of directors, and any shareholder proposals in conformity with state law and bylaws (including advance notice requirements) or Exchange Act Rule 14a-8. 

·        Make shareholder list available for inspection (which may include Internet posting in the case of an electronic-only meeting). 

·        Comply with any procedural and other requirements set forth in corporate bylaws, if any such requirements are established (may vary among companies).

Not Legally Required

The following are some typical elements of a company's annual meeting that are not generally compelled by law, unless specified in a particular company's bylaws, though many of these elements are expected in the marketplace. 

·        Allow shareholders to ask questions or to make comments in course of meeting;

·        Have officers or directors make any presentations, live or taped;

·        Allow shareholders to propose proposals from the floor of the meeting, or amendments, unless in conformity with state law and  procedures in bylaws (most companies require advance notice, and proposals must be proper under state law);

·        Have any particular officers or directors in attendance, other than those contemplated by the bylaws to administer the meeting;

·        Allow shareholders to voice points of order, unless perhaps they would seek to enforce procedures established in the bylaws); or

·        Rules of conduct, which are not legally enforceable against the company even if adopted by the company for the meeting unless they are incorporated into bylaws.   


July 10, 2010


Frank G. Zarb, Jr.

Katten Muchin Rosenman LLP

(202) 625-3613


** This is a summary only, and is not intended to provide detail as to legal requirements or to provide any legal opinion or legal advice.




This Forum program is open, free of charge, to anyone concerned with investor interests in the development of standards for conducting shareholder meetings with electronic participation. As stated in the posted Conditions of Participation, the Forum's purpose is to provide decision-makers with access to information and a free exchange of views on the issues presented in the program's Forum Summary. Each participant is expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

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