By Chris S. Jacobsen
Esquire, Poole Shaffery & Koegle
An important question in the time of COVID-19 health restrictions remains: How does a California corporation hold its meetings while maintaining social distancing and complying with Public Health orders?
Fortunately, the Corporations Code provides a number of alternatives to physical meetings. Meetings of the Board of Directors may be had using conference telephone, electronic video screen communication or other electronic transmission.
Participation in a meeting by conference telephone or electronic video screen communication constitutes “presence in person” at the meeting so long as the participants are able to hear one another.
Participation by other electronic transmission constitutes presence so long as each participant can communicate with all other participants concurrently and each participant is provided the means of participating in all matters before the board, including the capacity to propose or object to a specific action to be taken by the corporation (Corporations Code Section 307(a)(6)). In addition, a board may take an action without meeting if all directors, individually or collectively, consent in writing to the action (Corporations Code Section 307(b)).
Meetings of the shareholders may also be conducted, in whole or in part, by electronic transmission or by electronic video screen communication, and such virtual shareholders are deemed “present in person” at the meeting, provided (i) the corporation implements reasonable measures to provide shareholders with an opportunity to participate in the meeting and to vote on matters submitted to the shareholders and (ii) if any shareholder votes or takes other action at the meeting by electronic means, the corporation maintains a record of such vote or action (Corporations Code section 600(a) and (e)). For the complete code, visit: bit.ly/CAcorporations.
However, Corporations Code section 603 requires an advance consent of the shareholders for the holding of such a virtual meeting and the technical logistics needed to manage a meeting involving a large shareholder group may be daunting. Corporations desiring to have the option to hold a virtual shareholders meeting would be well served by undertaking the shareholder consent process well in advance of their proposed meeting date.
Always check with an experienced attorney to make sure your business is in compliance with the nuances of the California Corporations Code requirements.
Chris S. Jacobsen is a partner in the corporate transactions and business law department at Poole Shaffery & Koegle LLP. His extensive experience encompasses all legal aspects of the business life cycle. For more information, visit PooleShaffery,com, or call (855) 997-7522.