A board of directors meeting is a formal gathering of an organization’s board of directors. It occurs annually to review and discuss the company’s performance over the past year, set goals for the upcoming year, and make important decisions affecting the organization’s direction and daily operations.
For some types of organizations, an annual directors meeting is legally required for transparency and accountability, prescribed in their bylaws. Other companies may use such meetings for simple check-ups on goals, for discussing performance, and for managing challenges with investors or external experts.
In this guide, you will find more information about recent legal requirements for annual board meetings, learn how to conduct them effectively and explore annual board meeting best practices.
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Are annual board of directors meetings required?
Various types of business organizations have different legal requirements. Therefore, to answer this question correctly, we must first specify the type of business entity in question. The following are some typical examples:
- S and C corporations. An annual board meeting is required by law for S and С corporations in the US.
- LLC and other organizations. For other types of organizations (e.g., LLC), such meetings can be prescribed in their bylaws.
- Government-owned organizations. For government-owned organizations, the requirement depends on specific regulations that govern the organization.
- Homeowners associations. Homeowners associations are required to send notice of their annual HOA board meetings.
- Non-profit organizations. For non-profit organizations, in some states, there might be a requirement for an annual board meeting. Even if not required, it is a great practice to demonstrate to donors that a board monitors how the organization’s activities are moving toward its goals.
Requirements for annual board meetings exist to protect shareholders’ rights to participate in corporate governance to ensure they benefit from the business’s decisions. This is why a corporation may face legal penalties or fines if it fails to hold an annual meeting. Skipping the annual board meeting may also damage the corporation’s reputation.
All US states require some sort of annual report filing for corporations. Additionally, some states require a corporate secretary (e.g., California), Board Chair positions, and keeping minutes records.
Standard requirements for annual board meetings
The strictest board requirements for annual meetings are set for corporations. While the particular nuances may vary from state to state, here are some general rules:
- The board of directors shall convene at least once a year.
- In most states, with the exception of Delaware, Kansas, Nevada, North Dakota, and Oklahoma, corporations are obliged to keep records of their meeting minutes. However, it is not mandatory to submit yearly stockholder meeting minutes to any state or other government agencies.
- A corporation should provide notice and a proxy statement to shareholders to inform them of issues to be addressed at the annual meeting.
- A company must also file a proxy statement with the Securities and Exchange Commission (SEC). The filing will specify the date, time, and location of the annual meeting, as well as executive compensation and any company material matters concerning shareholder voting and nominated directors.
- Quorum should constitute at least 51% of the board. Companies specify the exact number in their bylaws. The absence of a majority won’t qualify as an annual board meeting in many states.
- Typically, the shareholders’ meeting agenda must include previous meeting minutes, annual financial performance, approval of directors’ decisions during the year, and election of the board of directors for the upcoming year.
- Other matters are usually stated in an organization’s bylaws. For example, an annual board meeting’s location, voting procedures, and the proper way to notify shareholders or members of an upcoming board meeting are specified in the company bylaws.
Tips for planning successful annual board meetings
Planning is critical to a productive annual directors’ meeting, which is generally the key responsibility of the corporate secretary together with the board chair and CEO.
To prepare effectively, here is what should be covered in advance:
- Select a meeting location, date, and time. Take into account the schedule of board members and then choose a time that will fit most participants. Picking a location, consider flight changes to avoid long travels for members. Consider establishing a consistent meeting place and time so the board becomes accustomed to it, reducing the hassle each year.
- Send notices about the location, date, and time. Notice requirements depend on the state and type of organization, but usually, they are between 10–60 days.
- Review the previous year’s board meeting notes and the agenda to create a list of points to deliver updates on.
- Build an annual report for the board of directors. Take content from management meetings during the year. Highlight performance on key metrics, important decisions, financial statements, success stories, and (don’t overlook) challenges. An annual meeting is the time to ask the board for advice. Communicate your goals and planned path and strategies on how to reach them.
- Set the agenda. Figure out the key issues to cover with your top management at the annual board meeting. Include formal talking points required by law, such as board members’ elections. Carefully plan the meeting to spend 30% on presenting a report and 70% on discussing one or two big challenges. Don’t forget to prepare and leave time for potential questions from the board.
Use our agenda for a board meeting template not to miss any important points.
- Send the annual board meeting agenda and related materials to board members in advance (2–3 days). Note, if you send the materials too early, they might forget the content. You can use board portal software to share and update meeting materials quickly with members without having to resend updates individually.
- Pay attention to onboarding newly elected board members. The performance of the whole board depends on it. Go beyond communicating information about an organization, mission, history, programs, and staff. A good practice is to assign a board “mentor”, examine past meetings’ discussions, and spend social time with other board members.
- Coordinate with board members to ensure their attendance, confirm their understanding of the agenda, and provide any additional information or resources they may need.
How to conduct an annual board of directors meeting effectively?
The board chair or CEO should be in charge of annual board meeting governance. They control the timing of sessions to keep the meeting on schedule. They know which topics can be discussed in depth outside the board meeting and which ones to expand on during the session. The board chair should encourage board members to actively participate in discussions.
We highly recommend prioritizing and inspiring engagement and dialogue over reporting.
A corporate secretary is responsible for taking accurate minutes. It is done faster and more accurately in the board portal software. The platform allows for conducting online board meetings, creating action items, establishing deadlines, assigning individuals to take ownership, and designating assistants and approvers on the go.
It is also important to handle any potential conflicts, should they arise. For this:
- Clarify each person’s specific role for the annual board meeting before the session.
- Remind participants of the meeting rules. For instance, to turn off mobile phones, not interrupt each other, and represent the interests of the whole board rather than their personal interests when speaking up and voting.
Taking minutes during the annual general board meeting
Board meeting minutes include detailed notes about all discussed points and decisions made during the meeting.
|The decisions made during a board meeting always result in a board resolution. Here is a template for a board resolution to simplify the preparation process.|
There are no requirements for the content and format of the minutes. However, since it is a legal document, the main point is to describe how a board reasonably came to its decision.
Aside from that, normally, all meeting minutes include:
Why is there so much attention around the annual general board meeting minutes?
There are several reasons why proper meeting preparation is considered so important:
- For corporations, taking minutes is a legal requirement. If you don’t respect the rule, you will face consequences such as shareholder personal liability and unfavorable tax rates.
- Minutes serve as legal documents that can be used in courts, by auditors, and by the IRS as evidence. That’s why they should be accurate, complete, and concise.
- You need minutes for setting future annual shareholder meeting agendas and preparing reports.
- Meeting notes are used as a reference point for future discussions and decisions.
Annual board of directors meeting minutes template
Consider standardizing the structure of your meeting minutes for greater consistency and efficiency in drafting. For this purpose, we recommend using a meeting-minutes template.
You can develop your own annual general board meeting template or use a stock one and adjust it to your needs. You can find our annual board of directors meeting minutes template with a detailed board development plan here.
How to enhance annual board meeting?
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- Annual board meetings are legally required for S and С corporations in the US and can be prescribed in the bylaws for other types of organizations.
- For corporations, failing to hold an annual meeting can lead to legal penalties or fines, damage to the company’s reputation, and loss of important opportunities.
- To conduct a productive annual board meeting, coordinators should send notices, review previous minutes, build a report, set the agenda, onboard new members properly, and confirm attendance with board members.
- To make the most out of the meeting, prioritize and motivate engagement and dialogue over reporting.
- Meeting minutes serve as a legal document that can be used in courts, by auditors, and by the IRS as evidence. That’s why they should be accurate, complete, and concise.
- For corporations taking minutes is a legal requirement. Non-compliance will lead to consequences such as personal liability for shareholders and unfavorable tax rates.
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What is the difference between a board meeting and an AGM?
A board meeting is a gathering of the board of directors to discuss and decide on the company’s affairs, while an annual general meeting (AGM) is a mandatory yearly gathering of shareholders where they can elect officers and directors, approve financial statements, and review other important matters.
How many annual meetings does a board conduct?
Corporations must meet at least once a year. An organization’s bylaws may prescribe more meetings during the year. There also might be urgent matters that create the case for an unscheduled board meeting. In 2021, companies held an average of eight formal board of directors meetings.
Interestingly, it is not necessarily in-person meetings. Some US states allow online board meetings and some companies organize informal virtual meetings to resolve pressing issues faster.
Annual nonprofit board meetings: What is needed?
Nonprofit organizations are generally not obliged by law to hold annual board meetings. However, they are considered a best practice for good governance. The consequences of not holding regular board meetings are rather limited and depend on the organization’s bylaws. However, nonprofit boards should be familiar with local, state, and federal nonprofit laws to ensure compliance with legal requirements.
When should a small corporation hold its board of directors annual meetings?
Small corporations should hold their annual meetings according to their bylaws and state laws. Typically, such organizations conduct yearly meetings at the end of the fiscal year and prepare an annual report for the board of directors. They also set goals for the coming year, approve financial statements, elect directors, and discuss pressing business issues.