
Fred D. Zemel
Partner
201-896-7065 fzemel@sh-law.comFirm Insights
Author: Fred D. Zemel
Date: May 22, 2018
Partner
201-896-7065 fzemel@sh-law.comMore than 20 states, including Delaware and New Jersey, currently allow virtual meetings of shareholders. Holding a shareholder meeting via the Internet is often more convenient and cost-efficient. However, companies must take steps to ensure that a virtual shareholder meeting is just as effective as a physical one.
State laws require companies to hold annual meetings of their shareowners to elect directors and to allow their shareowners to vote on matters in which a vote by shareowners is required for approval. Many states have relaxed their laws to authorize two types of virtual shareholder meetings. In a true virtual meeting, the meeting among shareholders is held exclusively via the Internet. In the hybrid form, some shareholders participate remotely and communicate with others present at a physical meeting.
As we discussed in greater depth in a prior article, virtual shareholder meetings have both benefits and disadvantages. In terms of convenience, shareholders can participate from anywhere and do not need to travel to a central location. For companies, the cost of a virtual meeting is generally significantly less than a physical meeting.
For shareholders, one of the primary disadvantages of remote participation is the lack of face-to-face communication. Critics of virtual meetings contend that shareholders should have the ability to confront the board of directors and assess their verbal and physical responses. Since voting may occur “live” rather than via proxy vote, virtual meetings can also be unpredictable, particularly when deciding a controversial issue.
For companies that decide to go “virtual,” the Virtual Annual Shareowner Meetings Study Group, which consists of 17 executives representing institutional investors, public companies, and proxy and legal service providers, recently published a whitepaper called “Principles and Best Practices for Virtual Annual Shareowner Meetings.” The paper aims to provide principles and best practices that companies should consider to ensure virtual board meetings are accessible, transparent, and cost-effectively managed, while meeting the important business and corporate governance needs of shareowners, boards and management.
The whitepaper outlines several principles that companies should take into account when they implement any form of virtual shareowner meeting. For instance, the report highlights that “companies should communicate clearly with their shareowners before moving to virtual meetings in order to ensure that shareowners understand what a virtual meeting is and how they can meaningfully participate.” It also notes that companies “should strongly favor the value of, and ways to facilitate, meaningful engagement of shareowners with board members, as they consider time and cost factors.”
The report also sets forth several best practices for virtual shareholder meetings, the majority of which are designed to ensure that virtual participation in shareowner meetings provides the same opportunity for dialogue among the company’s shareowners, management and directors. Below are a few examples:
For businesses considering a virtual shareholder meeting, the whitepaper is a great resource. We also encourage companies to work with an experienced New Jersey business attorney to make the meeting a success and ensure compliance with state law. Finally, if you have any questions or if you would like to discuss the matter further, please contact me, Fred D. Zemel, or the Scarinci Hollenbeck attorney with whom you work, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!