Stockholder meetings, voting, proxies, written consent, and removal or replacement of directors (Delaware)

Black-letter propositions

1. 01

   An annual meeting of stockholders must be held for the election of directors on a date designated by or under the bylaws, unless directors are elected by written consent in lieu of an annual meeting as the statute permits.

2. 02

   Notice of a stockholder meeting must be given not less than 10 nor more than 60 days before the meeting to each stockholder entitled to vote, and must state the place, date and hour and, for a special meeting, the purposes for which it is called.

3. 03

   Unless the certificate or bylaws specify otherwise, a majority of the shares entitled to vote, present in person or by proxy, is a quorum, and the certificate or bylaws may not set a quorum at less than one-third of the shares entitled to vote.

4. 04

   Unless the certificate or bylaws provide otherwise, on matters other than the election of directors the affirmative vote of a majority of the shares present in person or by proxy and entitled to vote on the matter is the act of the stockholders.

5. 05

   Unless the certificate or bylaws provide otherwise, directors are elected by a plurality of the votes of the shares present in person or by proxy and entitled to vote on the election of directors.

6. 06

   The certificate of incorporation may provide for cumulative voting, under which each stockholder has a number of votes equal to the shares held multiplied by the number of directors to be elected and may cast all votes for one director or distribute them among the candidates.

7. 07

   A stockholder may authorize another person to act as proxy, but no proxy may be voted after 3 years from its date unless the proxy provides for a longer period.

8. 08

   A duly executed proxy is irrevocable if it states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power, whether the interest is in the stock itself or in the corporation generally.

9. 09

   Unless the certificate of incorporation provides otherwise, any action that may be taken at a stockholders' meeting may be taken without a meeting, without prior notice and without a vote, if written consents are signed by holders of outstanding stock having not less than the minimum number of votes needed to take the action at a meeting at which all shares entitled to vote were present and voted.

10. 10

    A written consent is not effective unless consents signed by enough holders are delivered to the corporation within 60 days of the first date on which a consent was delivered.

11. 11

    Unless the certificate or bylaws provide otherwise, vacancies and newly created directorships may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director.

12. 12

    Any director or the entire board may be removed, with or without cause, by holders of a majority of the shares then entitled to vote at an election of directors, except that stockholders may remove a director of a classified board only for cause unless the certificate provides otherwise, and with cumulative voting a director cannot be removed without cause if the votes against removal would be enough to elect the director.

Use this attack sequence under time

Common wrong turns

• The default quorum is a majority of shares entitled to vote, but the charter or bylaws may lower it to no less than one-third.
• Directors are elected by a plurality, while other matters need a majority of the shares present and entitled to vote.
• A proxy is revocable unless it says it is irrevocable and is coupled with an interest.

Worked example

A corporation's bylaws are silent on quorum and voting. At the annual meeting, holders of 60 percent of the voting shares attend. On a proposed charter-related matter 35 percent of all shares vote for it and 25 percent vote against.

Practice this topic

Meetings, notice, quorum, and voting

Section 211(b) of the Delaware General Corporation Law requires an annual meeting for the election of directors on a date designated by or under the bylaws, unless stockholders act by written consent to elect directors as the statute allows. Section 222(b) requires notice of a meeting not less than 10 nor more than 60 days before the meeting to each stockholder entitled to vote, and section 222(a) requires the notice to state the place, date and hour and, for a special meeting, the purposes.

Section 216 lets the certificate or bylaws specify the quorum and the required vote, but a quorum may not be less than one-third of the shares entitled to vote. Absent a specification, a majority of the shares entitled to vote present in person or by proxy is a quorum, the act of the stockholders on matters other than the election of directors is the affirmative vote of a majority of the shares present and entitled to vote on the matter, and directors are elected by a plurality of the votes of the shares present and entitled to vote on the election.

Cumulative voting, proxies, and written consent

Section 214 allows the certificate of incorporation to provide for cumulative voting in the election of directors, so that each holder has votes equal to the number of shares multiplied by the number of directors to be elected and may cast them all for one director or distribute them. Section 212(b) says a proxy may not be voted after 3 years from its date unless it provides for a longer period, and section 212(e) says a proxy is irrevocable only if it states that it is irrevocable and is coupled with an interest sufficient in law to support an irrevocable power.

Section 228(a) allows stockholders, unless the certificate provides otherwise, to act without a meeting, prior notice or a vote if written consents are signed by holders having not less than the minimum votes that would be necessary at a meeting at which all shares entitled to vote were present and voted, and section 228(c) says the consent is ineffective unless consents signed by enough holders are delivered to the corporation within 60 days of the first date on which a consent was delivered.

Vacancies and removal of directors

Section 223(a) provides that, unless the certificate or bylaws provide otherwise, vacancies and newly created directorships may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and it allows an officer or stockholder to call a special meeting or apply to the Court of Chancery for an election if the corporation has no directors in office.

Section 141(k) provides that any director or the entire board may be removed with or without cause by holders of a majority of the shares then entitled to vote at an election of directors, except that in a corporation with a classified board stockholders may remove only for cause unless the certificate provides otherwise, and in a corporation with cumulative voting a director may not be removed without cause if the votes cast against removal would be sufficient to elect the director if cumulatively voted at an election of the entire board.

Frequently asked questions