Virtual Shareholder and Board Meetings: Important Considerations for Wisconsin 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 private entities organized in Wisconsin 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 in addition to the requirements of the Wisconsin Statutes.
If your organizational documents/operating agreement do not already provide for virtual meetings, then you will need to review the Wisconsin Statutes to determine actions that must be taken to hold a virtual meeting.
Please also see the emergency guidance released by the Wisconsin Department of Financial Institutions on April 3, 2020, which confirmed that Wisconsin corporations may hold virtual annual meetings, but did not provide any specific relief from Wisconsin statutory requirements to do so.1
Limited Liability Companies
Virtual meetings for LLCs may not be an issue since they are not required to hold meetings under Wisconsin Statutes.
For-Profit Corporations
Shareholder Meetings
Shareholder meetings may be held by means of remote communication if the corporation’s bylaws authorize the corporation’s board of directors (the “Board”) to determine that meetings may be held by remote communication. Hence, it may be necessary for the Board to approve an amendment to the corporation’s bylaws. In addition, the Board must determine that the specific meeting will be held by remote communication.
In addition to the Board approving any necessary amendment to the corporation’s bylaws and authorizing that the meeting will be held by remote communication, the corporation must, among other things, (a) include in the notice of the meeting a description of the means of remote communication to be used, (b) implement reasonable measures to verify that each person present and permitted to vote is a shareholder (or proxy), (c) implement reasonable measures to provide shareholders and proxies a reasonable opportunity to participate in the meeting, (d) maintain a record of voting or action by any shareholder or proxy that votes or takes other action by means of remote communication and (e) make the corporation’s shareholder list open to the examination of any shareholder during the entire time of the meeting on a reasonably accessible electronic network and provide the information required to access the list with the notice of the meeting.2 3
Director Meetings
Meetings of the Board of for-profit corporations may be held by means of remote communications.
Wisconsin Statutes provide that unless the articles of incorporation or by-laws provide otherwise, the Board may permit a meeting to occur by means of remote communication as long as either (a) all participating directors may simultaneously hear each other during the meeting, or (b) all communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.
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.
Wisconsin 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.4 Thus, in the event that a quorum of the Board of Directors 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 Wisconsin Statutes.
Not-for-Profit Corporations
Members (if any)
Wisconsin Statutes are silent on holding member meetings via remote communication, as a result of which careful consideration should be given to the way in which remote meetings are held, if any, to ensure the validity of actions taken at such meetings.
Directors
Director meetings of not-for-profit corporations may be held by any means of communication.
Wisconsin 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 either (a) all participating directors simultaneously hear or read each other’s communications during the meeting, or (b) all communication during the meeting is immediately transmitted to each participating director, and each participating director is able to immediately send messages to all other participating directors.
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. If requested by a director, minutes of the meeting shall be prepared and distributed to each director.5
Wisconsin 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.6 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.
Foley has created a multi-disciplinary and multi-jurisdictional team, which has prepared a wealth of topical client resources and is prepared to help our clients meet the legal and business challenges that the coronavirus outbreak is creating for stakeholders across a range of industries. Click here for Foley’s Coronavirus Resource Center to stay apprised of relevant developments, insights and resources to support your business during this challenging time. To receive this content directly in your inbox, click here and submit the form.
2 Wis. Stat. § 180.0705, § 180.0709 and § 180.0720.
3 Wis. Stat. § 180.0709.
4 See generally Wis. Stat. § 180.0303.
5 WI. Stat. § 181.0820(3).
6 See generally Wis. Stat. § 181.0303.
