Governance Help 101: The Difference Between Shareholder, Board, and Participant Meetings
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Governance Help 101
Shareholder, Board, and Participant meetings. These three meetings are often confused by clients, understandably so, as they seem very similar to each other. So, let’s talk about the purpose of each and how they differ from one another.
| Meeting | Purpose | Description |
|---|---|---|
| Shareholder meeting | A shareholder meeting is a meeting held by the legal owners of the corporation to discuss and vote on any corporate issues that require a shareholder vote, such as electing the Board of Directors. | State corporate law dictates the requirements for
shareholder meetings and actions. These requirements
are captured in the company’s bylaws. It can be common to hold a shareholder meeting in conjunction with a board meeting. These meetings may also be held separately. Regardless of whether they’re held together or not, these two meetings are, and should be considered, distinct. Shareholder meetings should be held annually. |
| Board meeting | A board meeting is held to oversee and manage the corporation at a high level. | Every corporation decides how often their Board of
Directors meets, what constitutes quorum, and other
details about how the Board functions. These decisions
are captured in the company’s bylaws. Most companies have quarterly board meetings and are 2-3 hours in length. |
| Participant meeting | The participant meeting is held to provide information to ESOP participants. It is not held to govern the company or ESOP. A participant meeting is often held jointly with the annual share price update to inform participants of company performance and the resulting share price. It is also a great opportunity for ESOP education and participant adaptation. | There is no legal requirement for ESOP-owned
companies to hold participant meetings, but many
companies do hold one annually. Companies may call participant meetings “shareholder” meetings to reinforce messaging about employee ownership. It is acceptable to call the participant meeting a shareholder meeting internally, but a participant meeting does not replace legal shareholder meetings as described above. ESOP participants are the beneficial owners of an ESOP, but not the legal shareholder. The trustee is the legal shareholder on behalf of the participants. |
Look over your bylaws to understand your company's governance requirements. If there are any corporate items that require shareholder action per your bylaws, Ventura is a shareholder as trustee for the ESOP, and we can help you execute shareholder actions via a shareholder meeting or written consent. Contact a member of the Ventura Relationship Management Team (RMT) to help you meet your company’s governance responsibilities.