We often assist clients with preparation for annual meetings of stockholders. A variety of materials provide guidance on the major components of an annual meeting, such as proxy statement disclosures and board approvals, including our memorandum, Proxy Materials and Annual Meetings under Maryland Law - 2024. However, fewer resources exist for preparing the items necessary for the conduct of stockholder meetings. This brief guide is intended to serve as a reminder of certain items that should be included in the preparation for annual meetings.
Stockholder Verification Procedures. Depending on whether the meeting is contested, you may want to be careful about ensuring that anyone seeking admission to the meeting was a stockholder of record on the record date or is an invited guest of management. For the former purpose, a list of record stockholders as of the record date should be available to the company representative responsible for confirming whether an individual may attend the meeting. Of course, many stockholders (known as "beneficial stockholders") will hold their shares through accounts with their stockbrokers. For beneficial stockholders, a decision should be made as to what form of verification will be required. For uncontested meetings, many companies accept a recent stockbroker monthly statement.
Virtual Meeting Providers. Since the pandemic, many annual meetings have been and still are held virtually. While virtual formats simplify some elements of planning, companies should actively engage with their virtual meeting providers rather than passively handing over control. Conversations should include setting procedures for testing the meeting platform and obtaining contact information for a member of the provider team who will be present for the virtual meeting or on call for immediate assistance. Importantly, depending on which provider you use, there may be differing requirements to verify stockholders before the meeting, as well as the voting, tabulating, and reporting procedures.
Postponements and Adjournments. Under Maryland law, a meeting may be postponed—delayed before the meeting starts—or adjourned at the meeting and reconvened at a later date. A postponed meeting may be held within 120 days of the original record date without setting a new record date. In connection with a postponed meeting, consideration will be required as to the appropriate notice obligations for a postponed meeting. An adjourned meeting may also be reconvened on a date within 120 days after the original record date without further notice to the stockholders, so long as the date, time, and place of the new meeting are stated at the meeting that is adjourned. If a company is seeking a vote that may require extra time to solicit the votes necessary for approval of the proposal, ensure that an alternate time and place for a postponed or adjourned meeting, including any virtual website location, have been selected in advance of the meeting. This advance planning allows the company to announce the time and place of an adjourned meeting at the meeting. It may be prudent to prepare an alternate meeting time and place even when there is no foreseeable need to adjourn, as emergency situations, including due to weather or technological issues, may arise. This is especially true for matters on which there is some difficulty in getting the necessary votes. Keep in close contact with your proxy solicitor on these matters and on how the vote is coming in.
Script. Prepare a meeting script that details what will be said, by whom, and when. Ensure the script accurately describes both the logistics of the meeting and any proposals or elections. If you already have a form script for annual meetings, ensure it is updated and consistent. For instance, when a script presents the vote standard for one proposal, it should present the vote standard for all proposals. Check applicable state law, the charter, and the bylaws for the vote requirement for each item to be submitted to the stockholders for a vote. Additionally, confirm whether the bylaws dictate who will be chair of the meeting and make sure the script is consistent with that provision of the bylaws. Consider with securities counsel whether to include in the script for the meeting a "forward-looking statement" disclaimer, the need for which may depend on whether a management presentation may be given or whether any stockholder questions could result in management making a "forward-looking statement."
Prepare a Q&A in Advance. In addition to the script, carefully evaluate what topics stockholders may be likely to ask about. Anticipating and preparing answers will allow the company to present information in a way that best highlights the company's successes and strengths and avoids the risk of potentially disclosing information that is not already public. Consider discussing in advance who is best situated to respond to each potential topic if unexpected questions arise. If a current event could impact your business, ensure presenters are prepared to respond to recent or breaking headlines, even if the response is as simple as "No comment" or "We are still gathering information."
Contingency Planning. Try to anticipate what internal questions might arise on the day of the meeting, and how these issues will be resolved. For instance, what will happen if a key presenter is unavailable or an emergency occurs that prevents the holding of the meeting? What contingency plans are in place? If you are holding a virtual meeting, ensure that providers are prepared for technical difficulties and have communicated to you the procedures in place to resolve potential technical errors or communicate such issues to stockholders. If you are holding an in-person meeting, make sure you have addressed any security-related issues at the venue (such as whether a list of all people entering the building needs to have been provided to building security in advance). Ensure all members of the meeting team have the information they need to respond swiftly and appropriately in the event of a problem.
Compliance with Laws. Remember that holding the annual meeting triggers certain disclosures under federal securities laws and exchange rules, such as the filing of a Form 8-K or NYSE Annual Affirmations. Review the requirements for the company with your team in advance of the meeting to ensure your compliance with these rules. If the company plans to record the meeting, consider whether this may raise issues of consent, particularly if stockholders may ask questions live, if a stockholder proponent will be presenting a proposal, or if the recording is planned to be posted on the company's website. Consider consulting with the company's legal counsel on state recording laws and any issues of consent that may be raised. Remember that anything said, posted to the company website, or posted by a social media team must comply with federal securities laws, including Regulation FD.
Conduct of Meeting Guidelines. Many companies use conduct of meeting guidelines setting forth such matters as how to address the meeting, how long stockholders will be allowed to comment or ask questions, and restrictions on the use of signs and recording devices. Review your conduct of meeting guidelines to ensure that policies and language appropriately reflect the manner in which your meeting is being held. Guidelines should accurately capture whether stockholders will be typing or speaking their questions. From time to time, we see conduct of meeting guidelines that are tailored for in-person meetings rather than a virtual meeting. Consider updating guidelines to include more current concerns, such as social media use during the meeting. We have prepared a form of conduct of meeting guidelines that is used with appropriate modifications by many of our clients.
Inspector of Election. In conjunction with the inspector of elections role, a company must provide a variety of materials: the inspector's oath, the inspector's final report form, the regular ballot, and the proxy holder ballot. Ensure that materials are carefully reviewed each year and that any updates to law, method of voting or form of meeting, and contents of votes have been properly included. Confirm that materials comply both with applicable law and with the company's own bylaws or policies. The inspector(s) should be selected in advance, of course, and alternate inspectors may be considered as part of contingency planning.
Affidavit of Mailing or Distribution. Ensure that the affidavit makes representations not only about mailing the meeting materials (such as the meeting notice, the proxy statement, the proxy card, and the annual report), but additionally about the mailing of the Notice of Internet Availability of Proxy Materials and the posting of the required materials online. If the company has a form affidavit, ensure that details are accurate for the current year and enter the form in the minutes for the meeting.
Stock Ledger Availability. Unlike some states, Maryland law does not require that the stock ledger be available at a meeting. However, virtual meeting providers often include the ledger online with other meeting materials. Maryland companies should consider whether it is desirable to have their stock ledger posted.
