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What is a Shareholders' Meeting?

By Carol Francois
Updated May 16, 2024
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A shareholders' meeting is an annual meeting of everyone who has purchased shares in a corporation. The meeting is usually scheduled around the public release of the annual financial statements. It provides an opportunity for shareholders to vote on key issues, such as the direction of the company, the decisions made over the last year and the financial results.

Shareholders' meetings are required as part of the articles of incorporation and there are a series of laws and routine requirements surrounding the timing, subjects and structure of this meeting. By law, shareholders must approve of any merger or restructuring of the corporation, changes to the articles of incorporation, amendments to the bylaws, sales or transfers of assets, use of stock option plans, issuing of securities and the dissolution of the corporation.

The attendees at a shareholder's meeting are usually representatives from investment firms, banks and pension funds that own large number of shares, as well as private investors. These professional are well-informed on the issues at hand, the significance of the requests and the details of the financial statements. Individuals who hold a minimal number of shares rarely attend the meeting and instead submit a shareholder proxy form before the shareholder's meeting.

A shareholder proxy form allows a shareholder to give permission for another party to vote on their behalf. If no specific shareholder is named, a default proxy is appointed, normally the chairman/woman of the meeting. On the form is a list of the items to be voted on and a space for the shareholder to indicate their vote. The proxy is responsible for collecting these forms and casting their votes on behalf of the absent shareholders during the shareholder's meeting.

In order for an item to be passes, a quorum must be present. A quorum is a predetermined number of shares that must pass a motion before it can be accepted. This value of shares may be represented by a large number of people, or several companies.

The number of shares for a quorum is based on the total number of shares issued and the number outstanding. A quorum vote must represent the wishes of the majority of voting shares. The value of the quorum required to pass a motion can be set based on each issue, with more significant issues requiring a larger supporting vote from shareholders.

Meeting minutes must be taken at shareholder's meeting and distributed to all shareholders with a set time period after the meeting. A shareholder's meeting provide an opportunity for investors to hear about the plans of the corporate executive for the next year and the explanations behind any financial losses or missteps.

Minority shareholders can achieve a disproportionate amount of influence over corporate executives through active participation in shareholder's meetings. Educated investors who challenge the claims of the company and illustrate a focus on a particular issue or cause can have deep impact.

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Discussion Comments
By minombre — On May 03, 2010

The biggest, and probably the best known shareholder meeting I have attended is Berkshire Hathaway shareholder meeting in Omaha, Nebraska.

It is a meeting that thousands of shareholders attend from near and far in order to hear CEO, Warren Buffett and vice chairman Charles Munger share some of their wisdom in a very relaxed and friendly way.

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