How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Loren Your Own Question
Loren, Attorney
Category: Legal
Satisfied Customers: 34058
Experience:  30 years experience representing clients.
Type Your Legal Question Here...
Loren is online now
A new question is answered every 9 seconds

In a closely held corporation, can the shareholders hold a

This answer was rated:

In a closely held corporation, can the shareholders hold a closed meeting without outside parties (such as attorneys, spouses, etc.)
Yes, technically anyone but the shareholders may be excluded.
Customer: replied 6 years ago.
I guess I should have worded the question a little differently. In a closely held corporation, can some shareholders (50%) insist on a closed meeting to exclude wives and attorneys or protest a meeting that openly invites wives and attorneys? And is there any legal precedence or general statutes that I can refer to?
There is no statute because the corporation statutes deal with the rights of shareholders, not the general public. Shareholder meetings are for shareholders and there is no general right that anyone, be they family members or otherwise, be allowed to attend. Think of it as a meeting of staff employees at work. There is no right for the employee family members to sit in on that meeting. No corporate statute or decision addresses that because it is implied in the rights and obligations of the shareholders. In fact, if anything, a non shareholder should need permission to sit in on the meeting.
Customer: replied 6 years ago.
How can you prevent it if a shareholder insists? I need to know how it can be prevented legally. I need a legal reference that will hold up in North Carolina as we are preparing to have a meeting and one shareholder wants to bring both his wife and an attorney. This particular shareholder obtained shares from my elderly mother (who was 100% shareholder at the time) who did not follow corporate by laws to transfer the shares, meaning she did not close the books 30 days before a meeting, the corporate secretary did not countersign the certificate, and the certificate was not in numerical order. She was elderly and signed a resolution that was not voted on by the Board of Directors, she attempted to install this shareholder as President of the corporation without benefit of a vote by the Board, etc. With her death, he keeps insisting he is President even though he was never voted by a quorum. We cannot seem to make him stop putting himself out as President so are having a shareholder meeting to vote on new directors who will then vote on new officers. His wife and attorney would disrupt the meeting. We need to find a legal way to keep them out.
You need to hold your meeting and not allow anyone not a shareholder to attend. If he insists then the meeting can be adjourned until such time as all of the issues you have raised are resolved among the parties or by a judge. If the bylaws do not prohibit, however, a shareholder may give their proxy to another to vote their shares for them but you can exclude anyone who is not a shareholder from sitting in on the shareholder meeting absent that proxy.
Customer: replied 6 years ago.
Is there any legal statute, precedence or brief that you can reference? If I have something in hand that proves I can legally block them, then there won't be an issue.
Only your corporate bylaws. Unless the bylaws provide otherwise, the shareholder meeting is only for shareholders or, in the absence of a shareholder, their authorized proxies. As I said, the statutes are written to define the rights and obligations of shareholders, not outsiders. What you can do is refuse to conduct a meeting in the presence of non-shareholders. Make a motion to adjourn the meeting until it can be lawfully reconvened with only the shareholders. You do not have to admit the non-share holds tom the meeting. If they refuse to comply, your remedy would be a petition in court requesting the court to order a meeting to be held by the shareholders in accordance with the bylaws.
Loren and other Legal Specialists are ready to help you