What is a special meeting of shareholders?
While the corporation must hold annual shareholder meetings, a shareholder meeting can be called at any other time. This is known as a special meeting of shareholders and it can be called by the directors, the officers or any shareholders who collectively own some minimum percentage of shares (this percentage is usually defined by state law as being between 5 and 10 percent). Typically, special meetings are called when there is going to be a change in the board of directors.
There must be a written notice issued ahead of the meeting so that all of the shareholders know that a special meeting has been set up. Typically this notice is issued by the corporate secretary, and this is known as a “call” (that is, a director, officer or shareholder issues a call to the secretary, who then issues notice of the call to all shareholders).
As with the annual meeting of shareholders, any vote is only valid if there is a quorum of shareholders present. This ensures that a minority of shareholders can’t take controlling actions. Each state’s corporate laws define what that state considers a “quorum” to be, and it is usually defined as being a majority of the outstanding voting shares (thus, over 50% of the shares must be represented by present shareholders). However, corporations can change this via their bylaws, and some corporations raise the requirement from a simple majority to something greater. Shareholders often appear at these meetings by proxy, which is where they authorize some other person to attend the meeting and vote their shares. Again, the state corporate laws and the corporate bylaws will generally define exactly how this proxy voting works.
Finally, as with the annual shareholders meeting, the corporate secretary must record minutes based on the meeting, outlining what the meeting was about, who attended, who ran it and when and where the meeting took place.