Our Public Company Advisory Practice has been seeing an increase in situations where clients are having difficulty reaching a quorum for an annual or special meeting or in securing enough votes to pass a proposal. Some of this difficulty can be traced to the decision by a number of brokerage firms to refrain from exercising discretionary voting on routine matters. In other instances, it results from companies, particularly small caps, having a diffuse retail shareholder base.
The bylaws of most companies and state law commonly provide broad adjournment authority at meetings. Typically, the presiding officer has the authority to adjourn a meeting for any reason, regardless of whether a quorum is present, and to establish the time and place at which the meeting will be reconvened. No vote of the stockholders is required. Under Delaware law, if a stockholder meeting is adjourned, and if the time and location of the reconvened meeting are announced at the time of adjournment, no additional notice to stockholders need be given unless (a) the adjournment is for greater than 30 days or (b) a new record date is fixed subsequent to adjournment.
The SEC has taken positions, however, that make adjournments and postponements more challenging if companies are not prepared. As a general matter, the SEC has taken the position that only the stockholders may authorize an adjournment and such authorization must occur through a separate adjournment proposal. This requires a separate proposal to be included in the notice to stockholders and in the proxy statement and on the proxy card. We discuss the SEC’s position on this matter in detail in our Adjournment Proposal piece and provide model proxy statement language for a separate proxy adjournment proposal.