Recording the annual shareholder meeting minutes is an important compliance requirement that business entities must meet. Corporations in the US, including those that elect to be taxed as an S Corporation, are required to conduct an annual meeting. Minutes of the meeting are taken to safeguard the record of these proceedings.
This doesn’t apply to limited liability companies as they’re not legally required to hold annual meetings or take minutes for that matter. However, members of a multi-member LLC can decide to conduct similar meetings if they feel it will help them run the business more effectively.
In this guide, you’ll learn the importance of meeting minutes, how they should be formatted, what should be included in them as well as all the relevant information you need to fulfill this compliance requirement.
What Are Annual Shareholder Meeting Minutes?
Corporations are required to hold a shareholder meeting after their fiscal year ends. Many activities take place at these meetings, such as appointments to the board of directors, sharing updates about the business, discussing financial information, providing shareholders an opportunity to ask management questions, etc.
The annual shareholder meeting minutes are a summarized record of the proceedings. Everything that was discussed and decided during that meeting is recorded in the minutes. Any actions taken as a result of those decisions are also mentioned. For example, if a proposal is put up for a vote, the results become a part of the minutes.
These minutes become part of the company’s official records. Whenever there’s a need to revisit a detailed account of those meetings, shareholders can easily find out everything about the proceedings by reviewing the minutes.
Why Are Annual Shareholder Meeting Minutes Important?
Shareholders have a right to information about how the business is being run, what is its financial position, its strategies for growth, etc. If something was previously decided and the management strays from it, the minutes make up the historical record that shareholders can call upon to exercise check and balance on the management.
Meeting minutes promote a culture of transparency in the organization. Nothing is hidden about the company’s actions and decisions at the annual meeting from the shareholders. They serve as legal documents that provide the management and board of directors with a sense of accountability not just to shareholders but to regulators as well since keeping minutes of the annual meeting is a key corporate governance requirement.
Who Is Responsible for Preparing Annual Shareholder Meeting Minutes?
The task of preparing the minutes for an annual shareholder meeting is typically entrusted to the company’s corporate secretary. Since taking meeting minutes is an integral part of this role, people who serve as corporate secretaries usually have the training required to adequately record minutes that meet compliance requirements.
Even if an organization doesn’t have a dedicated person for this role, it’s also possible for the board of directors of a company to appoint someone to record the meeting minutes, though that’s typically not the case in most organizations.
What Information Should Be Included in Annual Shareholder Meeting Minutes?
The entire reason minutes have been made a compliance requirement is to safeguard crucial information for future reference. All essential information needs to be recorded in the minutes so that the exercise serves its desired purpose.
At the very least, the minutes of a meeting will typically include details about the date, time, and venue of the meeting, names of the people in attendance and those who are absent, a summary of the meeting’s agenda, and any proposals that may be put up for a vote.
Anything of substance that’s being shared during the meeting would be mentioned in the meeting. This may include any reports being presented about the company’s performance, financial statements, board resolutions, and more. Important discussions and decisions made during the meeting are recorded in addition to voting results of proposals.
How Should Annual Shareholder Meeting Minutes Be Formatted?
Consider creating a basic format that can be used for all your annual shareholder meeting minutes. It’s going to streamline the task and ensure consistency. The format should be organized clearly and logically, beginning with the company name as the heading, followed by the date and location of the meeting.
Include the list of attendees at the beginning followed by any required introductions or details about their roles. The names of those unable to attend the meeting should also be included. A concise summary of the agenda should then be presented so that the crux of the meeting becomes apparent immediately.
The major points of all the discussions carried out should be mentioned next as well as any action items that were decided by the attendees. Any voting results also need to be added alongside the relevant proposals for proper recordkeeping.
Once all the necessary information is added to the minutes, they should be signed and dated by the presiding officer or the person who’s been assigned to certify them.
How Can Shareholders Access Annual Shareholder Meeting Minutes?
Improving transparency and access to information is the primary reason why meeting minutes have been made mandatory for corporations. It’s typically possible for shareholders to access the minutes of the annual meetings, provided they go through the proper channels.
For example, this may require reaching out to the company’s corporate secretary or requesting them through another appropriate channel, such as the investor relations department. Some companies also have a policy whereby they make the minutes available on their website. Others may choose to include the minutes in their annual reports to distribute them through other means, such as email newsletters.
How doola Simplifies Another Key Compliance Requirement
There are other compliance requirements for organizations beyond annual meeting minutes. Businesses must strive to diligently maintain their books. This helps simplify things during tax season, in addition to providing a clear picture of the company’s financial health.
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Can annual shareholder meeting minutes be modified or amended?
Minutes of an annual shareholder meeting can be amended even years after the fact by way of an amendment motion, which if approved by all members allows for the required modifications to be made.
How long should annual shareholder meeting minutes be retained?
Most corporations will typically retain the annual shareholder meeting minutes for a few years but there’s no bar on the maximum amount of time for which the minutes can be retained, so it could be forever, in theory.
Are annual shareholder meeting minutes publicly available?
Minutes can be public documents that members may ask to review by going through the proper channel. It’s also not uncommon for some organizations to be legally exempted from having to share their minutes with the public.
Are annual meeting minutes legally binding?
The meeting minutes become official internal documents of the company and become legally binding documents as well.
Is there a difference between public and private company annual meeting minutes?
Meeting minutes of private companies are typically not made public, however, they’re accessible by members of the company and any other person with whom the company would want to share the minutes.