Corporate governance encompasses a labyrinth of laws, regulations, rules, and documents. A private corporation is subject to state law and its charter and bylaws (collectively, “organizational documents”). Public companies (shares of which are traded on stock exchanges) are also subject to federal securities laws and exchange rules. Congress periodically passes new securities laws, and the Securities and Exchange Commission (SEC) administers them through regulations. The evolving regulatory landscape has significant compliance costs. State law requires corporations to hold annual meetings where
shareholders elect directors and vote on fundamental corporate changes,
including mergers and dissolution. In private “close corporations,” the
annual meeting may be a formality handled on paper through the written
consents of shareholders. As corporations grow larger, meetings tend to
become increasingly traditional and formal. Some states’ laws and
organizational documents permit electronic meetings, albeit traditional
meetings are customary. |
Publications >