Insight Conducting Board and Shareholder Meetings through Electronic Means
When picturing a meeting of a corporation’s board of directors, one might imagine a scene in a large conference room, overgrown dark wooden table running the length of the room from north to south, financial statements displayed on a large white screen on the north end opposite a chairman wearing a Brooks Brothers’ suit and a skeptical scowl. As for a meeting of the corporation’s shareholders, one might recall the scene from the movie Wall Street, where Gordon Gecko gives his impassioned endorsement of greed to a hotel ballroom full of Teldar Paper’s concerned stockholders.
As it turns out, these Hollywood-inspired images often differ from the actual proceedings of a board or shareholder meeting. At Hawley Troxell, we are often asked by our corporate clients how they may conduct their board or shareholder meetings more efficiently, especially through the use of modern electronic means of communication, such as teleconference or webcast.
For Idaho corporations, Idaho Code 30-1-820 provides that, with respect to board meetings, the directors may participate through the use of any means of communication by which all directors participating may simultaneously hear each other during the meeting. A director participating in the meeting by this means is deemed present in person at the meeting. While there is a statute permitting “virtual” board meetings, unfortunately there is not a similar statute for shareholder meetings. Often our corporate clients—for various reasons, whether it be the cost and logistics of conducting physical shareholder meetings, the number of shareholders, or the geographic location of shareholders—ask us if shareholders can participate in the meeting by telephone or webcast.
While there is currently not an Idaho statute expressly permitting “virtual” shareholder meetings, we remedy this by including in a corporation’s bylaws a provision that allows participation in shareholder meetings through the use of electronic means. Certain protocols must be in place to ensure that (1) everyone attending the meeting can hear everyone else, whether the individuals are attending the meeting in person or on the phone or web; (2) the corporation’s officers can identify the persons on the phone or web as shareholders of record; and (3) a written record of the actions taken by the shareholders participating virtually is kept in the corporation’s minutes. This provision mirrors current Delaware corporate law allowing for virtual shareholder meetings.
If you own or manage a corporation, how do you conduct your board and shareholder meetings? Do you wish the process could be updated to take advantage of modern electronic means? It can and we can help. It’s not Hollywood. It’s good business.
If you would like more information about this topic, or other legal issues, please contact us at 208.344.6000 or contact a member of our Business Group.