Putnam's Handy Law Book for the Layman

by Albert Sidney Bolles

If the by-laws require that an annual meeting shall be held at a particular time, and those whose duty it is to call it, forget to do so, it may be held afterwards, and the officers elected and other business transacted would be as valid as if the meeting had been held at the proper time.

Should the officer who ought to call a meeting refuse to do so he may be compelled by law to call it. This proceeding is called a mandamus, and is issued at the instance or request of the shareholders.

"Besides annual meetings, corporations hold many stated or regular meetings at monthly or other times. Thus if a meeting of proprietors must be called by twelve of them, a call signed by eleven is defective. If a statute requires a committee of a society to sign the call, it cannot be signed by the clerk, nor by him for them. If the trustees of a corporation must issue the call, this cannot be done by the president. If exclusive authority to issue the call is vested in the directors, it cannot be exercised by the president and secretary. If the articles of association provide that meetings of shareholders may be called by the board of directors, or by any three shareholders, the president and cashier cannot issue a valid call. But if a board consists of three members and there is a vacancy, the other two may act and give the notice."

A well understood distinction exists between the calling of regular and special meetings. Regular meetings are held in the way set forth in the charter and by-laws of a corporation; special meetings are called at irregular times on proper authority. A notice for a special meeting must state the object of it, and no other business can be transacted. On the other hand unless the regular meeting is of great importance no mention need be made of its object in the notice.

An authorized meeting may be adjourned from time to time without giving further notice, for it is only a continuation of the original meeting. Says an eminent judge: whether a meeting is continued without interruption for many days, or is adjourned from day to day, or from time to time, many days intervening, it is evident that it must be considered the same meeting.

A meeting may be legally held though one of its members is incapable, physically or mentally, from receiving notice. "The law cannot look into the capacity of the stockholders to transact business, but can only regard the capacity of the aggregate body when duly assembled." On the death of a stockholder, the purchaser, if the stock has been sold, should have it transferred, or give distinct notice to the company how notices of its meetings should be sent to him; if neglecting to do this, he cannot charge the corporation with neglect should it continue to send notices to the former address.

Two other points may be mentioned concerning notices. One is, they may be waived and this is often done. Many a question though arises, what action amounts to a waiver of notice. If each shareholder attends in person or by proxy and participates in the meeting, he cannot afterward question its legality because he received no notice of it. An improper notice may also be cured by ratification. Thus if a secretary calls a meeting instead of the directors, and his action is properly ratified by them, the call is effective. More generally, the action of a meeting will be declared valid where it appears that every stockholder who did not participate in the meeting ratified its action afterwards. An election of trustees of a church may be valid even though the notice lacked the proper length of time and the names of the trustees whose seats became vacant at the election, if it was fairly conducted and all who had the right to vote were present. Likewise a stockholder who knows of the sale of his railroad, though not legally notified of the meeting which authorized its sale, and was not present, may be bound by its action through acquiescence. And a stockholder who, after receiving notice of a meeting called by the directors to consider their neglect of duty and who decides not to go, is not thereby prevented from taking action against them by the stockholders who did attend and authorized their unauthorized action. Lastly a stockholder who was present cannot complain that notice was not given to others; the objection is personal.

Next we may inquire, who can vote at such meetings? Unless prevented by charter, statute or by-law a stockholder may vote at any corporate meeting even though no certificate of stock has been issued to him. Nor does his indebtedness for his stock prevent him from voting. On the other hand if inspectors were not bound by the record of ownership in the company's books and went behind them to find out the real ownership of the company's stock, they would often have a grave task before them. Consequently in many, perhaps all of the states, only stockholders or those holding proxies for them can vote at a general election. By statute the stock record of ownership is usually made the conclusive test of the right to vote. Stockholders who thus appear on the stock books at the date of a meeting are entitled to vote the stock.

A trustee is the legal owner of stock standing in his name and may vote the stock for all purposes; but a testator may impose limitations on his voting power. Should trustees under a will holding a majority of the stock of a corporation disagree, and one of them should be enjoined from voting it, a minority stockholder would be entitled to an injunction to restrain the other trustee from holding an election or voting the stock alone until the right to vote the stock had been legally decided.

A different rule applies to a naked trustee who holds the title to the stock without any real interest in it. He can indeed vote, but in the way directed by the beneficiary or real owner. In Colorado, by statute, perhaps in some other states, a person to whom stock has been issued as trustee without the knowledge of the owner, is not a bona fide stockholder and cannot vote.