Some Things That The Corporations Code Doesn’t Tell You About Annual Meetings

Annual meetings of shareholders are important.  If a corporation fails to hold one for a period of 60 days after the designated date or, if no date is designated, for 15 months, then the superior court may summarily order a meeting.  Cal. Corp. Code § 600(c) (compare Section 211(c) of the Delaware General Corporation Law in which the periods are only 30 days and 13 months, respectively).   Given the significance of annual meetings, it’s surprising how many details are left unaddressed by the General Corporation Law.  Here are a three:

  • Who is permitted to attend?  Maybe the answer to this question is too obvious.  But issues can arise an xenia may not rule the day.  For example, a shareholder may wish to bring along his or her lawyer, other adviser or even a stenographer.  My view is that annual meetings should not be like Odysseus’ house, filled with uninvited guests.  The only persons entitled to attend are shareholders as of the record date, proxy holders of shareholders on the record date, the directors, and members of management and any others necessary for the conduct of the meeting. 
  • Must a proposal be moved?  Many annual meeting scripts call for the chairperson to ask that each proposal be moved and seconded.  The practice of requiring a motion and a second was developed as parliamentary procedures to ensure an orderly meeting. The Corporations Code, however, does not require formal motions or seconds.
  • How long must, or can, the polls remain open?  The California General Corporation Law doesn’t answer either question but does provide that the inspector of elections determines when the polls closed.  Cal. Corp. Code § 707(b).  Oddly, it doesn’t say who has authority to determine when the polls open.  The Delaware General Corporation Law simply states that the ”date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting”  but leaves the world to guess who must, or may be, the announcer.

Why Polling Is All About Counting Heads

The noun “poll” has undergone an interesting evolution.  Originally “poll” referred to the head; hence a poll tax is a head tax.  In Act IV, Scene 5 of Hamlet, Shakespeare uses the term in this sense when in Act V, Ophelia sings:

And will he not come again?
And will he not come again?
No, no, he is dead;
Go to thy deathbed;
He never will come again.
His beard was as white as snow, 3070
All flaxen was his poll.
He is gone, he is gone,
And we cast away moan.
God ‘a’mercy on his soul!
And of all Christian souls, I pray God. God b’ wi’ you

However, in Act IV, Scene 3 of All’s Well That Ends Well, “poll” assumes a synecdochic meaning when Parolles reports ”that the muster-file, rotten and sound, upon my life, amounts not to fifteen thousand poll; half of the which dare not shake snow from off their cassocks, lest they shake themselves to pieces”.

What Barbering and Polling Have in Common

As verb, “poll” had the meaning of to cut the hair.  Thus a poll-deed was a deed executed by one party only and cut straight across as opposed to an indenture that was cut in a zigzag line.  An indenture contained identical provisions that were bifurcated by a crooked cut.  By matching the two pieces, a party could prove the genuineness of the document.

Topics:  Annual Meeting, Corporate Governance, Delaware General Corporation Law, Shareholders, Voting Rights

Published In: Business Organization Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

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