Updated October 2026: clarified that under Texas law, missing a meeting or other formality is not by itself a basis for holding owners personally liable.
State corporation laws, including Texas law, require corporations to hold an annual shareholders’ meeting, although in Texas the shareholders can take the same actions by unanimous written consent instead (or by a smaller majority’s written consent if the certificate of formation allows it). Limited liability companies (LLCs), although not subject to the same statutory requirement, may hold regular meetings in accordance with their governing documents.
What Is the Purpose of a Corporation’s Annual Meeting?
State law generally requires corporations to hold an annual shareholder meeting. State laws differ slightly on what must happen at an annual corporate shareholder meeting, but it typically addresses the company’s annual report, board of director elections, new business ventures, changes to internal procedures, and dividends.
The annual shareholder meeting is usually scheduled shortly after the end of the fiscal year. This timing allows for discussion and review of the previous year’s financial performance. Some of the meeting activities may also be necessary for the annual corporate report, which most states require.
Depending on state law, there may be additional actions such as the following that require the shareholders’ and the board’s approval:
- Amending company bylaws
- Reorganization, including merger and acquisition deals or creating a subsidiary
- Asset sales
- Issuing securities
- Determining executive salaries and benefits
- Changing shareholders’ rights
- Dividend payments
- Dissolving the corporation
The corporate actions that will be taken by a vote of the shareholders at the annual meeting should be specified in the corporate bylaws. Bylaws should also detail voting procedures (for example, when a matter should be put to a vote or whether a simple majority or a supermajority is needed).
The annual meeting is an important part of running a corporation well. As a legal entity separate from its shareholders, a corporation provides a liability shield that protects shareholders’ assets from business liabilities. In Texas, skipping a meeting does not by itself put that shield at risk: the Texas Business Organizations Code bars holding shareholders personally liable for a company’s obligations because the company failed to observe a corporate formality, such as holding meetings (Tex. Bus. Orgs. Code § 21.223(a)(3)), and the same rule applies to LLCs (§ 101.002). Courts in some other states still weigh missed formalities when deciding whether to “pierce the corporate veil.” In every state, meetings and minutes create a record that decisions were properly made, which helps prevent disputes among the owners.
What Is the Purpose of an LLC Annual Meeting?
As mentioned, an LLC operating agreement may require an annual meeting or regular meetings. If it does, the members should follow it. In Texas, missing a meeting the company agreement calls for is not by itself a basis for personal liability, but it can invite disputes among the owners over whether decisions were properly made.
In addition to liability protection, there are practical business reasons for LLC members to occasionally convene, including the following:
- Give owners a forum to discuss strategy, ownership, and issues facing the company
- Establish a record of key company events, decisions, and member voting records, which can be useful internally and externally (e.g., documentation for the Internal Revenue Service or a state licensing board)
- Measure progress (or lack thereof) on previously decided plans and proposals
- Address leadership changes, operating agreement amendments, and the addition or removal of members
- Promote good communication and decision-making processes
- Have a CPA or attorney present to address questions related to taxes, accounting, and legal issues
Having meeting rules and keeping accurate records of meetings can serve as evidence—in the eyes of members and outside interested parties—that the company is truly legally separate from its members and is being run well.
How to Hold an Annual Meeting
When an LLC’s operating agreement or articles of organization require annual meetings, members should comply with any formalities specified, such as the provision of notice or the preparation of minutes. If annual meetings become burdensome, LLC members can modify the governing documents to eliminate them. Alternatively, the operating agreement can include a provision allowing unanimous written consent in lieu of meeting, which serves the same purpose as holding a meeting.
Corporations, on the other hand, are subject to more stringent state and federal compliance standards. Typically, when holding an annual meeting, a corporation must take the following steps:
- Give written notice to shareholders at least 10 days (and in Texas, no more than 60 days) before the meeting stating when and where it will take place and, for a special meeting, what will be covered
- Have a quorum present (in Texas, holders of a majority of the shares entitled to vote, in person or by proxy, unless the certificate of formation sets a different level)
- Keep meeting minutes that comply with disclosure rules in the bylaws
Publicly traded corporations are subject to additional requirements, including the Securities and Exchange Commission’s proxy rules. The proxy rules require corporations to provide certain disclosures to shareholders in a proxy statement that describes matters up for shareholder vote, along with a proxy card.[1]
Get Step-by-Step Legal Guidance for Your Corporate Meetings
As mentioned, one of the advantages of a corporate or LLC structure is that the business is a separate legal entity from its owners. Following your governing documents and state law keeps that separation clear and keeps the company’s decisions on solid footing.
State law dictates many of the procedural requirements for annual corporate meetings, including notices, quorum rules, and whether the meeting can be held virtually. State laws also govern the articles of incorporation and bylaws that contain annual meeting requirements.
Our business attorneys can help ensure that your corporation or LLC complies with all requirements related to its annual meetings or other formalities required by state law or the LLC operating agreement. For legal advice about your corporation’s or LLC’s annual meeting, schedule a consultation.
[1] Annual Meetings and Proxy Requirements, U.S. Secs. & Exch. Comm’n (Apr. 6, 2023), https://www.sec.gov/education/smallbusiness/goingpublic/annualmeetings.
This article is general information as of the date shown above, not legal advice for any particular situation. The law can change after an article is written.
Partner, Peters Kussmaul Crosier PLLC
