USA Law and Practice Contributed by: Kai Liekefett, Derek Zaba, Ram Sachs and Evan Grosch, Sidley Austin
approval of stock issuances and non-binding propos- als on a variety of subjects. It is not typical to hold more than one meeting of stockholders per year. 2.2 Notice of Shareholders’ Meetings Under Delaware law, notice of a special meeting of stockholders typically follows similar rules as for annual meetings of stockholders. Such notice must include certain information such as the purpose for which the meeting is called. 2.3 Procedure and Criteria for Calling a General Meeting Companies’ governing documents typically permit the board of directors to call a meeting of shareholders. Governing documents may provide for other individu- als, such as the chairperson of the board or the chief executive officer, to call a meeting of shareholders. Some companies may also provide shareholders with the right to call a special meeting of shareholders, so long as such shareholders’ ownership interest in the company exceeds a specified percentage. Special meetings are typically called by the board of directors to approve extraordinary transactions. Shareholders, in contrast, may call a special meeting as part of an effort to change company strategy or operations (eg, a campaign to remove and replace directors by an activist or hostile bidder). Procedures for calling a special meeting of sharehold- ers are often specified in a company’s by-laws or cer- tificate of incorporation. 2.4 Information and Documents Relating to the Meeting Shareholders generally rely on the filings required under federal securities laws, primarily the company’s annual report filed on Form 10-K and the proxy state- ment, which includes various information on the com- pany, corporate governance, executive and director compensation, and the proposals subject to a share- holder vote at the meeting.
Under Delaware law, stockholders are entitled to examine the list of stockholders entitled to vote at a stockholder meeting during the 10-day period ending on the day prior to the meeting date. 2.5 Format of Meeting Delaware law permits companies to hold stockholder meetings virtually. 2.6 Quorum, Voting Requirements and Proposal of Resolutions Delaware law requires that quorum consist of no less than a third of shares entitled to vote at the meet - ing. Otherwise, the certificate of incorporation or the by-laws may determine the quorum requirements. In the absence of any specifications, Delaware law will generally require that a majority of shares entitled to vote will constitute a quorum. 2.7 Types of Resolutions and Thresholds The corporation’s certificate of incorporation or by- laws may set requirements for a resolution to pass. For instance, the voting standard for the election of directors may be a majority of outstanding shares, a majority of shares present or a plurality voting stand- ard (ie, the election of directors who receive the high- est number of votes). In certain instances, the relevant threshold may be set by statute. As one example, the removal of direc- tors generally requires the approval of the majority of outstanding shares. 2.8 Shareholder Approval Matters requiring shareholder approval include the election of directors, the amendment of the certificate of incorporation, certain stock option plans, certain issuances of shares, and a sale of the company or of all or substantially all of the company’s assets. Voting standards vary, frequently requiring the approv- al of a majority of outstanding shares present at the meeting or a majority of outstanding shares. For the election of directors, the default vote standard is the plurality of shares, which can be modified in the organisational documents to a majority-vote standard.
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