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How To Conduct A Shareholder Meeting

Aug 17, 2007
A Shareholder Meeting is presided over by the Chairman. The Chairman has the responsibility of coordinating the meeting unless the Chairman assigns this responsibility to someone else. Below is a list of formalities that must be followed at a shareholder meeting.

1. Participants' List: Preparing a comprehensive list of the participants of the meeting is the first step in conducting a shareholder meeting. All the participants should be carefully noted to avoid any discrepancy.

2. Proper Notice: A proper notification, well in advance, should be issued to all the participants about the venue, timing, and substance of the meeting. Ideally the shareholders give courtesy calls confirming their intent to be present at the meeting.

3. Agenda: A clear agenda should be formulated and circulated among the organizers and the participants, giving them a brief and fair idea as to what is expected at the meeting.

4. Reference Material: Any reference material regarding the meeting should be kept close at hand. This includes documents such as the company's charter, figures, and reports of importance to the agenda of the meeting.

The Importance of Shareholder Meetings:
Below is a list of some of the decisions that come under the umbrella of Shareholders and which can't be decided without their consent.

1. The decisions pertaining to the classes of shares and the rate of annual dividends for the respective classes of shares.

2. The decisions related to any change in the management or the board of directors such as addition or termination of its members.

3. Everything related to the company's image in the market and any damage to it.

4. The decisions regarding the acquisition of another company.
5. The decisions related to the dissolution of the company.
6. The approval of annual financial statements.

Essentials of Shareholder Meetings:
There needs to be a specific number of participants for a meeting to be conducted. This is known as Quorum. Generally, the assembled shareholders should qualify for more than 51% of the company's shares. Otherwise the status of the meeting remains unofficial and is devoid of the power to implement any decision or pass any resolution. Hence the coordinator meeting should adhere strictly to the notion of the Quorum to make the decisions of the meeting worthwhile. Although it is generally required to have a majority of little more than 50% of votes to preside over any resolution, there are some aspects and subjects in a company's charter where, according to law it is required to gather more than 65% votes to pass a particular resolution. Below is a list of such subjects.

1. Decisions on the classification of shares and the number of shares to be offered to the particular class.

2. Introduction of any change in the company's charter.

3. Dissolution of the organization.

Additional Help
There are provisions for virtual shareholder meetings wherein physical presence can be replaced by interaction from a distance. There is also software available in the market to assist corporations in streamlining their efforts to conduct a smooth shareholder meeting. This software assists in documenting the meeting and provides other considerable assistance to minimize human errors and efforts.
About the Author
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their
web site http://www.smallbusinessconsulting.com
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