Online Board Meetings – What to Know When Social-Distancing Requires Your Meetings to Go Virtual

Business Insights

Online Board Meetings – What to Know When Social-Distancing Requires Your Meetings to Go Virtual

Apr 16, 2020 | Business Insights

Many corporations and LLCs that have traditionally held in-person shareholder and board meetings are looking for alternatives during the social distancing required for COVID-19. Fortunately, corporate and LLC governance statutes in most states, including Delaware, Virginia, Maryland and DC allow for meetings to be held remotely, if some special considerations are followed.

Corporations are required to hold meetings of their shareholders at least annually. The applicable corporate statute and the corporate bylaws will likely provide additional information on when the meeting should be scheduled (and there may be a set date), and how to provide the appropriate notice for such meeting. Typically, corporations will have annual shareholder meetings, and may also have “special” meetings of the shareholders with separate notice requirements. Either way, these meetings can be held remotely over the telephone or through an online meeting portal like Zoom.

Likewise, corporations can hold regular or special meetings of the board of directors remotely. A corporation may already have a standard procedure if a director is unable to join an in-person meeting, so holding board meetings remotely is not too unusual.

For LLCs, the state statutes will allow for remote meetings, but it is most important to review your Operating Agreement to see any requirements for a virtual meeting. It is possible the Operating Agreement is explicit that remote meetings are not allowed or that there is a very specific format for such a meeting. In this case, in order to get work completed, the Members may consider amending their Operating Agreement to allow for such meetings.

When a meeting is held remotely, or a participant is remote, that participant (a shareholder, director, member or manager) needs to be able to hear and be heard. Put more plainly, the meeting host cannot mute all the lines all the time. The shareholders or members need to be able to ask questions of management, and directors or managers need to discuss the topics at hand. For the board to make a decision, the duty of care requires a process of collaboration in the meeting. If one director cannot be heard that process is interrupted.

Note also that a telephonic or Zoom meeting is a meeting of the respective shareholders/board/members/managers. Minutes should be prepared of the meeting, with any resolutions passed noted prominently. Any meeting would need to have the proper notice provided and have a quorum present. This is not a discussion that leads to a written consent – although it could be if the body makes that decision. The distinction is important because at a properly noticed meeting where a quorum is present, the body typically acts by majority (or whatever requirements the organizational documents would provide), but unanimous consent is likely required for a written consent. When it may be difficult to locate all the members of a large board, making sure the numbers work is important.

Finally, remote meetings typically don’t have a secret, or blind ballot. However, if the technology works to provide comfort on voting, that can be continued. More likely than not, the Board or constituent body would vote orally with the secretary counting. State statutes allow for “electronic transmission” of voting, so a verbal Yes or No would work. In case the body was acting through unanimous consent, pdf signatures, email responses or a voting box on email all constitute electronic transmission. My personal preference is to only use these methods when you have no other option, and to follow up with written signatures for the minute book.

With a little bit of planning, corporate and LLC meetings can easily be held remotely. With corporations, make sure to review the relevant corporate statute and bylaws, and with LLCs, review the relevant LLC statute and Operating Agreement for any specific details.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors, and are not necessarily the views of any client.


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