February 19, 2019

February 19, 2019

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February 18, 2019

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Who May Adjourn A Shareholders' Meeting?

"Adjourn" is derived from the Latin words "ad" and "diurnus", meaning "to" and "daily" (a diurnal flower opens only during the day).  The word came into the English language through Old French "ajorner" ("soup du jour" is the soup of the day).  Based on etymology, an adjournment is a moving a meeting to another day.  This is the meaning given by William Shakespeare to Cardinal Campeius (Lorenzo Campeggio) when in Act II, Scene 4 of Henry VII Katherine of Aragon leaves her divorce proceedings:

"So please your highness,
The queen being absent, 'tis a needful fitness
That we adjourn this court till further day:"

Strangely, many meetings end with a motion to adjourn.  If the intent is to end a meeting, the motion should be to adjourn the meeting sine die (i.e, without a day). 

Who can make such a motion?  California Corporations Code Section 602(c) seemingly answers the question by providing:

"In the absence of a quorum, any meeting of shareholders may be adjourned from time to time by the vote of a majority of the shares represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (b)."

On closer inspection, however, the statute fails to provide all of the answers.  The statute, by its terms, applies only when a quorum is absent.  Thus, it does not purport to apply to situations in which a quorum is present.  Further, the statute does not say that any such meeting may only be adjourned by the vote of a majority of the shares represented either in person or by proxy.  Thus, it does not on its face exclude the possibility that others may be invested with such authority.  For example, the Bylaws might empower the chairperson or other person presiding at a meeting of shareholders to adjourn a meeting either to another date or sine die.  Such a provision might prove useful in cases of emergency.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
Partner

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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