A corporation is required hold an Annual Shareholders and Directors meeting, also known as the Annual Meeting, each year on the date determined in the corporation’s Corporate Bylaws. The purpose of the Annual Meeting is to elect or re-elect Directors for the next year and to discuss any business affecting shareholders and the direction of the company. Corporations are required by state law to hold an Annual Meeting and distribute meeting minutes to all Directors and Shareholders.
Holding an Annual Meeting is an important procedure you must complete to ensure that your company maintains corporate compliance. Without proper compliance, a company puts itself at risk of losing its “good standing” status and may not be allowed to legally continue operations. By documenting company decisions in the meeting minutes, your corporation is essentially shielding itself against potential disputes, audits or lawsuits. Also, the meeting minutes keep your investors apprised of their venture and provide a written summary of business activities for reference purposes, both internally and for outside sources such as financial institutions and government entities.
If your corporation is small or even a 1-person company, the most common way to conduct your Annual Meeting is to hold a “Paper Meeting.” You can begin a Paper Meeting by having the Directors and Shareholders sign a “Waiver of Notice” to avoid sending a written notification of the meeting. Generally, small business are operated with ongoing communication between Directors and Shareholders so they are all on the same page about the direction of the company at the time of the Annual Meeting. If this describes your business, all you need to do is complete your meeting minutes, print a copy of the minutes and distribute them to your Directors and Shareholders. Then, once the minutes have been approved, simply place them in your Corporate Minute Book and your Annual Meeting has officially been completed.
Larger companies may choose to hold a real meeting in which Directors and Shareholders attend in-person or participate by conference call. A real meeting will require you to send out notices of the meeting and also, to modify the meeting minutes according to what is discussed and decided during the meeting. Prior to the meeting, you will need to distribute, along with the meeting notice, the following to your Directors and Shareholders: copies of any proposed resolutions, company reports, background materials and minutes of the previous Annual Meeting (if your company was in business during the prior year). At the meeting itself, the company secretary will record attendance, count votes during important procedures such as electing or re-electing Directors for the next year, and take notes of every meeting activity. Once the meeting has been concluded, the secretary will then formally document all activities in the meeting minutes and distribute copies to all Directors and Shareholders. The signed original copy of the meeting minutes will be placed in your Corporate Minute Book and your Annual Meeting will be done.
No matter which version of the Annual Meeting is right for your company, it is crucial that you hold your Annual Meeting every year to stay compliant and keep your Directors and Shareholders up-to-date on any and all decisions affecting the company.
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