1. An Annual Shareholders' Meeting Must Be Held

During the first month of the year national banks are required to hold their annual shareholders' meeting. The state banks and trust companies also hold a similar meeting, though perhaps not in the same month. Indeed, every corporation is required to hold an annual meeting at which all of its members may participate.

2. By-Laws Regulate The Time And Manner Of Holding It

The by-laws usually regulate the monthly date for holding the meeting and the length of the notice that must be given to shareholders. The requirements of the law and by-laws should be carefully regarded, for it is important to act legally on such occasions. "It is not only a plain dictate of reason, but a general rule of law, that no power or function intrusted to a body consisting of a number of persons can be legally exercised without notice to all the members composing such body."1 Suppose there is a controversy among the shareholders over the election of directors, and the requirements concerning the time and place and matters relating to the meeting at which they were elected have not been properly followed. They may after all be defeated by judicial action.

The by-laws should be careful to state how the notice of the meeting is to be given to each shareholder, through the post office or personally. If no mode is provided, the notice must be served on each shareholder. This is the legal rule, though perhaps if notice had been given through the post office long enough to establish a custom or usage, that might suffice.

1 Morawetz, Private Corporations, § 354.

Again, the meetings can not be held at an unreasonable hour, or at an unusual place where all the shareholders can not without great inconvenience be present. Furthermore, after a meeting has been organized, it may be adjourned from time to time for the transaction of business without giving another notice to the shareholders, for it is a continuation of the same meeting.

3. Majority Act For All

When such meetings are properly called, it is a general rule that the majority act for the corporate body, unless the charter or other law plainly requires action by the larger number in order to bind all. "Each and every shareholder contracts that the will of the majority shall govern in all matters coming within the limits of the act of incorporation." 1

By "majority" is meant more than one half of those who are present at the meeting. To hold a legal meeting a majority of all the shareholders need not be present or represented, or a majority of all the shares need not he voted; hut those who do assemble will form a quorum for transacting business, and a majority of that quorum can bind the whole body.

4. How Shareholders Must Transact Business

When the shareholders assemble, they must transact their busi ness as their charter or other laws or customs prescribe.

If, for example, business is transacted before the hour set for holding the meeting, it would be invalid, regardless of the number present, unless perhaps every shareholder was at the meeting. And if it be a special one the notice must indicate the nature of the business to be transacted

1 Morawetz Private, Corporation, §354

This is not needful in the case of an annual meeting, because every shareholder is supposed to know what is to be done. If, however, any extraordinary action is to be taken, like the sale or purchase of a banking house, in which the wishes of the shareholders are desired, it is proper and usual to specify this in the notice.