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Volume XI, Number 106

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I.D. Requirements And Annual Meetings

State corporate laws are surprisingly sparse on the details of annual meetings.  The California Corporations Code, for example, requires that a corporation hold an annual meeting for the election of directors but does not detail who can or cannot attend that meeting.  Cal. Corp. Code § 600(b).  Given this legal lacuna, do shareholders have a right to attend meetings of shareholders and can corporations impose conditions upon attendance?

Many publicly traded companies do impose conditions upon attendance, including a requirement that the shareholder present photo identification.  For example, The Coca Cola Company's proxy statement for its 2020 annual meeting imposed an ID requirement:

"All attendees will need to register in advance and bring a valid photo ID to gain admission to the 2020 Annual Meeting.  Please note that cameras, sound or video recording equipment, cellular telephones, smartphones or other similar equipment, electronic devices, large bags, briefcases or packages will not be allowed in the meeting room.  You will be required to enter through a security checkpoint before being granted access to the venue."

(emphasis in the original).  In today's world of virtual shareholder meetings and online voting, corporations generally require that a shareholder have a control number in order to access the form of proxy.  See SEC Rule14a-16(d)(9) (requiring that a Notice of Internet Availability of Proxy Materials include "any control/identification numbers that the security holder needs to access his or her form of proxy").

There does not seem to be much case law addressing whether a corporation may exclude a shareholder or impose conditions on attendance.  I did locate this opinion by U.S. District Court Judge William C. Griesbach addressing the question under Wisconsin law:

"Finally, Orion moves to dismiss the fourteenth claim, which alleges 'exclusion from annual shareholders meetings.' Under Wisconsin law, as well as the company's bylaws, shareholders have the right to vote their shares. Wis. Stat. § 180.0721.  But Orion points out that nowhere in the statutes or elsewhere is there a right to attend shareholder meetings in person.  Attendance in person implicates the company's physical property rights, which include the right to admit or exclude anyone, including shareholders.  Without any statutory authority to the contrary, we must presume that the company may reasonably exercise its property rights in its discretion. Here, according to the complaint, the Defendant viewed Plaintiff as a security risk given the acrimonious termination and allegations. (ECF No. 1 at ¶ 463.) Indeed, it is common that employees who have been fired will become hostile, and many ex-employees of corporations are also stockholders. Given these circumstances, it is perfectly reasonable for a company to retain the right to police its own premises, and therefore it would be surprising if the mere ownership of stock entitled an individual to unqualified access to a company's premises every time it holds a shareholders' meeting.  Without any precedent for such a claim, I will decline the invitation to find a cause of action based on being barred from shareholders' meetings."

Verfuerth v. Orion Energy Sys., 65 F. Supp. 3d 640, 651-652 (2014).

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© 2010-2021 Allen Matkins Leck Gamble Mallory & Natsis LLP National Law Review, Volume XI, Number 98
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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Bishop works with privately held and publicly traded companies on federal and state corporate and securities transactions, compliance, and governance matters. He is highly-regarded for his in-depth knowledge of the distinctive corporate and regulatory requirements faced by corporations in the state of California.

While many law firms have a great deal of expertise in federal or Delaware corporate law, Keith’s specific focus on California corporate and securities law is uncommon. A former California state regulator of securities and financial institutions, Keith has decades of...

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