Advisors must stay on their toes. The recently enacted Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) and a new SEC proxy access rule have drawn more attention to shareholders' meetings. Attorneys John Mark Zeberkiewicz and Megan Shaner therefore offer compliance professionals a refresher course on the Delaware laws for corporate meetings. Each Delaware corporation must hold a meeting annually to elect its directors. The board sets the date of the meeting, if the charter and bylaws do not. After selecting a proper date, the directors should be wary of altering a publicly announced meeting date, especially during a proxy contest. The board (or whoever else the charter or bylaws specify, which is often an officer and sometimes no one) may call a special meeting of shareholders at any time. Activist/shareholders have recently been pushing for bylaws that allow shareholders who own a specific percentage to call a special meeting.

Delaware is hip to empty voting. After setting the meeting date, the board must set the record date—determining which shareholders are entitled to get notice of the meeting and to vote—and must give notice. The record date generally must be designated as (and notice normally must be given) 10 to 60 days prior to the meeting date. The board may provide separate record dates for notice and for voting, which decreases the chance of empty voting. (The term refers to voting by those who lack an economic interest in the shares but who are still record holders and so may vote.) Setting separate dates occurs mostly for special meetings on key company transactions, the authors explain. The notice must specify a meeting's place, date, and hour; the notice for a special meeting must also specify the purpose. Notice is often mailed but may be given by any of four types of electronic transmission to which a shareholder consents. The corporation must prepare a shareholder list that can be inspected at the meeting and, for the preceding 10 days, at the corporation's principal place of business or through an electronic network.

No one need set foot in the meeting. Since a corporation may conduct a meeting via remote communication, it may do so over the Internet, if it makes a reasonable effort to confirm who the stock and proxy holders are and to give them a reasonable chance to take part. A quorum is usually a majority of the shares permitted to vote. The charter or bylaws may set a different standard but not less than one-third of the shares permitted to vote. The shareholder vote needed to approve a corporate action varies, the authors note. For most actions, the vote quantum is a majority of the shares at the meeting (whether in person or through proxies) that are permitted to vote. For each proposal, the proxy statement must reveal the method of counting votes and of handling abstentions and broker nonvotes for quorum and voting purposes. Under Dodd-Frank, a public company must give shareholders a nonbinding vote on executive compensation and, at least every sixth year, the chance to decide how often this vote will take place.

Rules give shareholders a leg to stand on. The corporation's proxy statement must include any shareholder's business proposal that satisfies Rule 14a-8 under the 1934 Act and any shareholder's nomination for director that satisfies new Rule 14a-11. (Note that the SEC has stayed the proxy access rule, which was to have taken effect in November 2010, pending the outcome of an appeal.) A bylaw in Delaware can also state what a shareholder must do to have a proposal or a nomination taken up at a meeting, even if the shareholder plans to bypass the corporation's proxy statement, but could provide that a proposal satisfying Rule 14a-8 also satisfies the bylaw. The SEC's position is that Rule 14a-11 does not preempt a state's nomination process, the authors indicate, although a bylaw cannot supersede Rule 14a-11. The Delaware corporation should appoint inspectors prior to a meeting; announce at the meeting the date and time at which the polls open and close; and disclose in its proxy statement who may adjourn a meeting and how.

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