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ANNUAL SHAREHOLDER MEETING CONDUCT

05.09.11

It’s not just Spring, it’s annual-shareholder-meeting season.  Many public and private corporations conduct their annual shareholder meetings in May. 

Companies typically will spend significant time and effort planning for the practical conduct of the annual shareholder meeting, including planning so that facilities, equipment and presentations work as proposed.  But there may be less thought given to the possibility that the meeting could be disrupted not by the failure of facilities or equipment, but by the conduct (or misconduct) of persons at the meeting.  A couple of measures that might be taken to anticipate such a disruption are the following:

  1. Most public-company annual shareholder meetings include significant presentations about the company and its business to provide information to shareholders.  In that situation, the actions necessary to satisfy the legal requirements for the meeting should be placed first on the agenda.  Therefore, if the meeting is disrupted or its agenda derailed, there will be an increased chance that the necessary business for the meeting will have already been accomplished.
  2. The board of directors or the chairperson should adopt rules of conduct for the meeting, intended to promote a fair and orderly meeting.  Although the rules of conduct may vary significantly depending on the circumstances, they typically:
  • stress the need for civility and courtesy by all persons at the meeting,
  • address how a participant may be permitted to speak at the meeting and how long he or she may speak,
  • indicate that a speaker is limited to questions or comments that are pertinent to the business of, or otherwise suitable for, the meeting,
  • prohibit cameras or audio- or video-recording equipment in the meeting, and
  • acknowledge that the chairperson of the meeting is in charge of the meeting and, if necessary, will enforce the rules of conduct.

If rules of conduct are adopted for the meeting, it is typical to provide them or make them available at the meeting registration desk to each person who attends the meeting.

OUR TAKE:  When planning for an annual shareholder meeting, companies should consider and, as prudent, take measures to anticipate the possibility of a disruption of the meeting because of participants’ conduct. 

The publications contained in this site do not constitute legal advice. Legal advice can only be given with knowledge of the client's specific facts. By putting these publications on our website we do not intend to create a lawyer-client relationship with the user. Materials may not reflect the most current legal developments, verdicts or settlements. This information should in no way be taken as an indication of future results.

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