Virtual Shareholder and Board Meetings: Important Considerations for Illinois 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 Illinois 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.
If your organizational documents/operating agreement do not already provide for virtual meetings, Illinois Statutes will apply.
Limited Liability Companies
Virtual meetings for LLCs may not be an issue since LLCs are not required to hold meetings under Illinois Statutes. Illinois Statutes remain silent on the use of virtual meetings. LLCs should review their operating agreements (or any other organization documents) to ensure that virtual participation in meetings is not prohibited.
For-Profit Corporations
Shareholder Meetings
Shareholder meetings may be held by means of remote communication unless specifically prohibited by the articles of incorporation or by-laws and to the extent certain steps are taken by the corporation.
These steps include, without limitation, for the corporation (i) to implement reasonable measures to provide shareholders and proxies a reasonable opportunity to communicate with each other and participate in the meeting,1 and (ii) to provide shareholders proper access to voting lists during the meeting.2
Director Meetings
Meetings of the Board of for-profit corporations may be held by means of remote communication unless specifically prohibited by the articles of incorporation or by-laws. A meeting may occur by means of remote communication as long as all participating directors can hear each other.3
In light of recent developments, the corporation should carefully review its (i) policies and practices surrounding shareholder and director virtual meetings and (ii) means of “remote communication” to confirm compliance with Illinois Statutes.
Not-for-Profit Corporations
Members (if any)
Illinois Statutes provide that member meetings may be held by means of remote communication unless specifically prohibited by the articles of incorporation or by-laws.4 All participating members must be able to communicate with each other during the meeting.
Directors
Unless specifically prohibited by the articles of incorporation or by-laws, director meetings of not-for-profit corporations may be held through the use of a conference telephone or other communications equipment, so long as all participating persons can communicate with each other.5
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1 805 ILCS 5/7.05.
2 805 ILCS 5/7.30.
3 805 ILCS 5/8.15(d).
4 805 ILCS 105/107.05(d).
5 805 ILCS 105/108.15(c).
