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Electronic Shareholder Meetings

As the operations of corporations become more global and as their shareholders become dispersed throughout the world, new mechanisms may be needed to maintain shareholder participation at annual meetings. Effective July 1, 2000, corporations incorporated under Delaware law were authorized by that state’s corporation law to hold electronic meetings. Other states have not been quick to follow Delaware’s lead, and other restrictions, such as New York Stock Exchange requirements, may prevent electronic meetings even for Delaware corporations. However, Delaware law may prove to be the leading edge in the evolution of electronic shareholder meetings for corporations chartered under laws of states in the United States.

 

Section 211(a)(2) of Delaware’s General Corporation Law provides that the board of directors in its sole discretion may authorize stockholders and holders of proxies to participate in and vote at an annual meeting even if not physically present at the meeting. The stockholders and proxy holders may be considered present at the meeting whether the meeting is held at a particular place or virtually and “solely by means of remote communication” if:

 

  • the corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder,
  • the corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and
  • if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the corporation.

 

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