August 25, 2017

Corporate Meetings by Conference Call or Skype

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Through the years the Indiana law on corporations has actually been a leader in innovation in many respects. One area in which Indiana took a leading role was to respond to changes in technology with respect to conducting corporate meetings. The historic requirement that shareholders, in person or by proxy, gather together in a single room to conduct a meeting, or that the Board of Directors had to gather together at one place to conduct business, was long ago replaced in Indiana by a provision allowing telephone (and now Skype or other such devices) to be the vehicle for meeting. So long as everyone involved in the meeting can hear each other at all times during the meeting, it is possible to have these meetings with various participants in remote locations. 

There is, however, one very important difference between shareholders’ meetings and directors’ meetings in this regard. The laws of the State of Indiana provide that directors may meet in this fashion unless their company’s articles of incorporation or their by-laws provide that they are not permitted to do that. On the other hand, shareholder meetings can be held from remote locations by a communications device only if articles or by-laws allow it. 

The effect of this provision is that if a corporation’s articles of incorporation and by-laws are silent on the topic of remote meetings by communication devices, then the directors may meet in that fashion, but shareholders may not. Any action taken by shareholders by, for example, a telephonic meeting in the absence of a specific authorization in the articles or the by-laws would be invalid. 

Any problems in this regard can be easily addressed by examination (and possible revision) of a corporation’s by-laws and articles of incorporation to be certain that the appropriate provisions are contained to allow, or to forbid if that be the corporation’s preference, remote meetings. It is a quick review and a quick fix of any problems that may appear, but it is a very important review to make.