Virtual Shareholder and Board Meetings: Important Considerations for Florida Companies
In these unprecedented times of “shelter in home” orders, remote working, and other strategies Americans are taking to mitigate the risks associated with COVID-19, we anticipate that many organizations will decide to transition to virtual meetings of shareholders, directors, members, and managers of entities. This alert is intended to provide basic guidance to entities organized in Florida considering virtual meetings. For additional considerations applicable to public companies, please see our prior client alert.
General Considerations for Virtual Meetings
As our world has become increasingly technologically dependent, many organizations have already addressed the concept of remote meetings in their organizational documents. In that regard, you should review your by-laws (if a corporation) or operating agreement (if a limited liability company (“LLC”)). If your organizational documents provide for remote meetings, you should follow the procedures outlined in them, provided that they must comply with the requirements of the Florida Statutes.
If your organizational documents/operating agreement do not already provide for virtual meetings, Florida Statutes will apply.
Limited Liability Companies
Meetings of members and meetings of managers of LLCs may be held by remote communications if all persons participating in the meeting can hear each other.
Virtual meetings for LLCs may not be an issue since they are not required to hold annual meetings under Florida Statutes.
For-Profit Corporations
Shareholder Meetings
Shareholder meetings may be held by means of remote communication if authorized by the corporation’s Board of Directors (the “Board”) and to the extent certain steps are taken by the corporation.
These steps include, without limitation, for the corporation (a) to implement reasonable measures to verify that each person present and permitted to vote is a shareholder (or proxy), (b) to implement reasonable measures to provide shareholders and proxies a reasonable opportunity to participate in the meeting, and (c) to maintain a record of voting or action by any shareholder or proxy that votes or takes other action by means of remote communication.1
Director Meetings
Meetings of the Board of for-profit corporations may be held by any means of communication.
Florida Statutes provide that unless the articles of incorporation or by-laws provide otherwise, the Board may permit a meeting to occur by means of any communication as long as all participating directors may simultaneously hear each other during the meeting.
If a meeting will be conducted remotely, all participating directors must be informed that a meeting is taking place at which official business may be transacted.
Florida Statutes also provide for emergency powers and provide for certain actions that may be taken in the event that a quorum of the Board of a for-profit corporation cannot readily be assembled because of a catastrophic event.2 Thus, in the event that a quorum of the Board of the for-profit corporation cannot be assembled due to COVID-19 (for example), implementing statutorily authorized emergency powers may be considered.
In light of the recent development, the corporation’s policies and practices surrounding shareholder and director virtual meetings, and the corporation’s means of “remote communication,” should be reviewed carefully to confirm compliance with Florida Statutes.
Not-for-Profit Corporations
Members (if any)
Member meetings may be held by means of remote communication if authorized by the not-for-profit corporation’s Board and to the extent certain steps are taken by the not-for-profit corporation.
These steps include, without limitation, for the corporation (a) to implement reasonable measures to verify that each person present and permitted to vote is a shareholder (or proxy), (b) to implement reasonable measures to provide members and proxies a reasonable opportunity to participate in the meeting, and (c) to maintain a record of voting or action by any members or proxy that votes or takes other action by means of remote communication.3
Directors
Director meetings of not-for-profit corporations may be held by any means of communication.
Florida Statutes provide that unless the articles of incorporation or the by-laws provide otherwise, the Board may conduct meetings through the use of any means of communication by where all participating directors simultaneously hear or read each other’s communications during the meeting.
If a meeting will be conducted remotely, all participating directors must be informed that a meeting is taking place at which official business may be transacted.
Florida Statutes also provide for emergency powers and provides for certain actions that may be taken in the event that a quorum of the Board of a not-for-profit cannot readily be assembled because of some catastrophic event.4 Thus, in the event that a quorum of the Board cannot be assembled due to COVID-19 (for example), implementing statutorily authorized emergency powers may be considered.
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1 See generally Fla. Stat. § 607.0709.
2 See generally Fla. Stat. § 617.0721(3).
3 See generally Fla. Stat. § 607.0709.
4 See generally Fla. Stat. § 617.0303.
