How to conduct a special director's meeting

Why do you need a special, as opposed to the annual, meeting of
directors? The annual meeting of directors occurs once a year,
usually right after the annual meeting of shareholders. Any other
meeting is generally called a special meeting of directors. The
official business of the corporation is conducted by the directors
when they meet as a board. During the year, circumstances may arise
that require special attention, such as issuing shares of stock,
purchasing assets for the corporation, amending the articles of
incorporation, or removing directors.

Steps to conduct a special meeting of directors:

1. Send Notice to the Directors. All directors
are entitled to notice of any meeting of directors. This is
fundamental to insure that any actions taken at the meeting are
legal and authorized. Requirements for notice of a special meeting
are usually contained in the corporation’s bylaws. At a minimum,
notice should include specifics as to date, time, and location of
the meeting. The notice should also state or describe the items or
business to be discussed and voted on at the meeting. Most
corporate laws require that the notice be served or mailed at least
ten days before the meeting.

2. How to Conduct a Director’s Meeting. There
is no required procedure in corporate law for conducting a meeting
of directors. The procedure used is up to the directors and/or
shareholders of the corporation. Some (mostly larger corporations)
use a formal procedure utilizing Robert’s Rules of Order with
motions made, seconded, discussion, and then a vote. Most smaller
corporations use less formal procedures consisting of a simple
discussion on issues and then a vote. The vote can be oral or in
writing but there should be a count of the vote taken by a
corporate officer, usually the corporate secretary. An agenda of
business to be conducted at the meeting is advisable but not
required.

Special Note About Quorum Requirements: A “
quorum” refers to the number of members of a body or group required
to be present in order to transact the business of the body or
group. Quorum requirements for a director’s meeting are most often
set forth in the corporation’s bylaws. The most common quorum
requirement is for the presence in person (including presence by
electronic means such as a telephone conference call) of a majority
of the authorized number of directors. Voting requirements are also
most often set forth in the bylaws. A common requirement is that if
a quorum is present, the affirmative vote of a majority of the
directors present is required. If the number of people required to
make up a quorum is not met at the meeting, any action transacted
or resolutions passed would not be valid and could be
challenged.

3. Prepare Minutes of Meeting. A corporate
officer or someone assigned by the corporate officer, needs to keep
minutes of the meeting. The corporate secretary usually does this,
but minutes can be taken by someone else. Minutes are simply a
written record of the proceedings of the meeting. There is no legal
requirement as to the form for minutes or how detailed minutes have
to be. However, they should be detailed enough for someone reading
the minutes to know what business of the corporation was conducted
at the meeting and what resolutions passed or failed. They should
also indicate whether a notice was given for the meeting, who was
in attendance at the meeting, and who voted on various resolutions
brought before the meeting. It is also advisable, but not required,
to indicate reasons for the directors taking certain action. For
example, if the directors decided to fire the president of the
company, it would be advisable to indicate the reasons. If the
president were to file some form of legal action relating to the
action, the minutes would reflect the directors’ reasons for taking
the actions.

Special Note: If a director is present at a
meeting but does not vote, he/she is generally considered to have
assented to or agreed with actions taken unless the director makes
his/her objection known. For a director’s own protection, any
objection to corporate action should be in writing or noted in the
minutes.

Minutes are seldom audited by government agencies and are mainly
for the use of the corporation. They do become important documents
in the event of legal actions involving directors, shareholders, or
others or in the event of disputes between shareholders. Generally,
the more information that is contained, the more helpful the
minutes will be in the event of disputes. A copy of the minutes
should be kept in the corporate records.