Best Practices for Conducting Shareholder Meetings in California with Undefined Presiding Officers

Introduction

Conducting shareholder meetings when the bylaws do not designate a presiding officer can be challenging, especially when shareholders are divided by class of shares and interests. This article outlines the best practices to follow under California law to ensure a smooth and efficient meeting, even in the absence of specific bylaw provisions.

1. Adhere to the California Corporations Code

In the absence of specific provisions in the bylaws, it is advisable to adhere to the California Corporations Code. Section 600(e) of the California Corporations Code provides general guidance on shareholder meetings, stating that “unless otherwise provided in the bylaws, the board may determine the place of any meeting, the means of electronic transmission by and to the corporation, if any, and the means of electronic video screen communication, if any, by which shareholders may participate in that meeting.”

While this section does not explicitly address who should preside over a shareholder meeting, it implies that the board of directors has some authority in determining meeting procedures.

2. Board of Directors Designates a Presiding Officer

When the bylaws do not designate a specific individual to preside over shareholder meetings, the board of directors typically has the discretion to appoint a chairman, president, or another officer to run the meeting. The board should choose someone who is impartial, knowledgeable about corporate governance laws and regulations, and able to facilitate a fair and efficient meeting that respects the rights of all shareholders.

3. Use Robert’s Rules of Order as a Guideline

In the absence of specific bylaw provisions, many corporations adopt Robert’s Rules of Order as a guide for conducting shareholder meetings. Robert’s Rules provide a standardized parliamentary procedure that can help ensure fairness, orderliness, and efficiency in meetings. While not legally binding, Robert’s Rules can serve as a useful framework for conducting shareholder meetings when the bylaws do not provide clear guidance on this matter.

4. Ensure Transparency and Fairness

Regardless of who presides over the meeting, it is essential to ensure transparency and fairness throughout the process. Shareholders should be informed about the meeting’s agenda, given an opportunity to voice their opinions, and allowed to vote on matters that affect their interests. Proper notice of the meeting should be provided according to California Corporations Code § 601, which stipulates that notice must be given at least ten days but no more than 60 days before the meeting.

5. Seek Legal Counsel

If there is uncertainty or disagreement about who should preside over a shareholder meeting or how the meeting should be conducted, it may be helpful to consult with an attorney experienced in corporate governance matters. Legal counsel can provide guidance on California law and help ensure that the meeting is conducted in compliance with applicable regulations.

Conclusion

When the bylaws do not designate a specific individual to preside over shareholder meetings, it is crucial to follow best practices and California law to ensure a successful and legally compliant meeting. By adhering to the California Corporations Code, having the board of directors designate a presiding officer, using Robert’s Rules of Order as a guideline, ensuring transparency and fairness, and seeking legal counsel when necessary, corporations can effectively navigate the challenges of conducting shareholder meetings in the absence of explicit bylaw provisions.