Tag: Board Directors

What is a RegA+ Annual Shareholder Meeting?

Posted on by Oscar Jofre

With Regulation A+ allowing companies to raise up to $75M USD, the regulation enables many great investors to support an issuer’s journey. From the everyday person to accredited investors, people can claim their stake in companies they foresee to be long-term successes. However, with shareholders come significant responsibilities issuers must uphold to maintain compliance with securities regulations. One such requirement is holding an AGM.

 

An Annual General Meeting, or simply AGM, is a meeting of shareholders that companies are required to hold once per year. The purpose is to provide shareholders with an update on the company and what plans lie ahead. During these meetings, the company’s directors will present annual reports to shareholders that are indicative of its performance. AGMs are a critical component of upholding the rights of shareholders, ensuring that they are provided all necessary information to make the right decisions regarding their investments. Typically, these meetings should be held after the end of the company’s fiscal year, giving shareholders adequate notice to attend or attend by proxy.

 

A company’s articles of incorporation and bylaws will outline the rules for an AGM, however, they typically include a review of the minutes from the previous AGM, financial statements, approval of the board of directors’ previous year actions, and election of directors. AGMs held by private companies do not require any regulatory filings but require them to check or change their bylaws to ensure that the meeting can be held online and information can be distributed digitally.

 

Before any AGM, shareholders will receive a proxy statement, which outlines the topics to be discussed at the meeting. The statement will include information on voting procedures for shareholders with voting rights, board candidates, executive compensation, and other matters that are important to a shareholder. The company will typically send shareholders a package containing this information by mail or over the internet if that is their preference. For shareholders that have invested directly in the company and their name is in the company’s official records, they are entitled to attend the meeting in person. For shareholders that have purchased shares through a broker-dealer or investment bank, they can request information on how to attend the meeting and cast their votes. Shareholders with the option to eVote can satisfy SEC requirements. Since 2007, “notice to access” rules enable companies to send a one-page notice to inform shareholders that materials are available online rather than being mailed a full copy of all reports.

 

AGMs are essential for the success of any private company, ensuring that shareholders are well-informed about company decisions and can exercise their voting rights. KoreConX offers our clients an all-in-one AGM planner as part of the REgA+ end-to-end solution. Our solution helps our clients maintain full compliance with securities laws, manage AGMs end-to-end, distribute circular materials, allow shareholders to securely vote online, and enable everyone to participate. We recognize that your shareholders are an important part of your company and strive to simplify the process of managing your relationships with them.

 

Annual shareholder meetings for RegA+ offerings are an essential part of compliance. Issuers are required to hold this meeting annually, empowering their shareholders to be active participants. Contact KoreConX to learn more about our AGM planning solution.

 

What is the role of a board director?

Posted on by Oscar Jofre

When thinking about corporate governance, the first roles that often come to mind are the executive officers like the CEO or CCO. These roles are often responsible for the day-to-day operations of the company, keeping things running smoothly, with other roles reporting to them. However, the board of directors is just as important as they look out for the interests of shareholders. 

The role of a board of directors is to provide company oversight, ensuring that the company is operating in the best interests of shareholders. Decisions that the board of directors is responsible for include hiring or firing company executives, creating policies for dividends and options, and determining executive compensation. The board also generally ensures that the company has the right resources in place to operate effectively. The board of directors is governed by company bylaws, which include the process for selecting directors and what their duties entail.

The board is made of elected members called board directors. The shareholders must elect directors as voting rights are generally included as part of their rights as a shareholder. Shareholders are allowed to vote on board directors during annual shareholder meetings. Generally, board director terms are staggered so that only a few are elected each year, rather than needing to elect an entirely new board whenever elections are required.

Board directors are responsible for upholding the foundational rules outlined in company bylaws. Failure to do so can result in their removal from the board. Actions that may necessitate a director’s removal may include using inside information for personal gain, making deals that are a conflict of interest to shareholders, using their powers as a director for things other than the financial benefit of the company, and other actions that would be detrimental to shareholders.

There are typically three types of directors; inside, outside, and independent directors. Inside directors are typical representatives of company management and shareholders and may include company executives or major shareholders. Outside directors are not involved in the company’s day-to-day decisions, making them more objective and help strike a balance between inside directors but are generally compensated for attending board meetings and carrying out their duties. Independent directors are required to not have any ties to the company; for example, a relative of a company executive would be ineligible for this role.

It is important to ensure that board directors diligently follow the bylaws that govern them to ensure they always are acting in the best interests of the company’s shareholders. The board serves as a check and balance with the company’s management. Shareholders should also take their right to vote seriously, executing whenever possible to ensure that they are protecting their investment in the company. 

 

What is the Role of a Corporate Secretary?

Posted on by Oscar Jofre

A Corporate Secretary is a required position set forth by state corporation laws and is part of the ‘check and balance’ on board members and offers the board advice and support. While providing the company with advice on the state laws, they are also tasked with ensuring that board members maintain their fiduciary duties to shareholders. 

 

One way they do this is by accurately recording and maintaining the minutes for the board meetings they usually set up. Corporate secretaries are responsible for ensuring that an adequate number of board meetings are held and that scheduling coincides with the availability of board members. They are required to comply with meeting notices and often are responsible for other logistical arrangements. This is just one of the basic tenets of the position and typically remains a constant between companies. 

 

Corporate secretaries are essentially a compliance officer for board members, serving as a liaison between the board, officers, and shareholders while maintaining documents that are required to keep the board and company in compliance with regulations. They also direct the activities related to the annual meeting of shareholders and share transfers. As a note, while the corporate secretary does not need to be a lawyer, they need to have sufficient knowledge of corporate and securities law to ensure compliance, so a background in law can be helpful. They should also be as well-versed in the company’s business, understanding it thoroughly to be an effective corporate secretary.

 

Even though the role of the corporate secretary is dynamic and complex, varying slightly between companies, the basic function of the position can be boiled down to being responsible for providing support to the board, officers, and shareholders on business matters and the laws that apply to them. Whether it is setting up, facilitating, or creating the agenda of a board or annual shareholders meeting, a corporate secretary is an essential and mandatory part of a company’s structure in the modern world of business. 

Life of a Company

Posted on by Oscar Jofre

I know, the title is odd. But the goal is to show how a company is formed and what is required for it  to be maintained. What most of the public sees is only related to sales or marketing, never the insides of the corporate structure or management.

The first step each of us make is to incorporate our organization, and we are provided with the company’s papers, also known as the “Minute Book”.

The Minute Book
For entrepreneurs, board directors, management, lawyers, auditors, shareholders, and broker dealers, the Minute Book is a lifeline. It is the historical log of all the key decisions and corporate actions made in the company.  Now, some of you will go to your lawyer and get a Minute Book binder, and some will go online and construct your binder.

One very important thing about your company’s Minute Book is that there is only ONE original and you must protect it. At the same time, you are required to provide access to your lawyers, auditors, board directors, shareholders, and anyone who is doing due diligence on your company.

What do you get in your Minute Book:

        • Certificate of incorporation – this provides a unique number to your company
        • The official date of incorporation in your jurisdiction
        • Bylaws: the rules you must follow in operating your company, such as
          • Number of directors
          • How many shares you can issue and class of shares
          • How to conduct board meetings
          • How to conduct shareholders meetings
          • Quorum for board and shareholders meetings

     

  • The Minute Book also has many other tabs for you to insert the ongoing corporate actions in the company.
  • The Minute Book is a living document and it requires that you update it as you are conducting your corporate actions. Those actions need to be recorded in your Minute Book and properly documented, so in the future when you are going through due diligence—for financing, acquisitions, going public, or opening a bank account—this information will be ready so you can move forward.Here is a list of some of the corporate actions your Minute Book needs to have. Some of these corporate actions will be in different sections of your Minute Book depending on how many documents are created.
          • Appointing director
          • Appointing officers
          • Notice of Shareholders Meeting
          • Opening a commercial bank account
          • Appointing auditors
          • Granting options
          • Accepting new shareholders
          • Accepting a loan, debenture, SAFE
          • Name change
          • Merger
          • Acquisition


      For each of these corporate actions, you will need directors’ resolution and/or shareholders’ resolutions and, in some cases, agreements, government filings, and regulatory filings. All of these documents will need to be stored in different sections within the Minute Book.

      This is important to know because as your company grows, more and more of these documents start to add up and the historical tracking becomes even more challenging to maintain.

      If your records are not up to date or properly recorded you will spend thousands and thousands of dollars to get those completed so that you can proceed with a transaction such as raising capital, loan, merger, acquisition, going public, etc.

      Along with managing all the corporate documents, you are also required to manage, report, and track all your shareholders on a timely basis. Depending on which exemption you used, the company would be required to provide quarterly,semi-annual, or annual reporting to your shareholders.

      I know all this might seems overwhelming. Welcome to being an entrepreneur! There are no shortcuts, but there is a way to do it so you are not burdened by all this and end up spending thousands of your hard earn money to fix issues when they emerge.

      As a fellow entrepreneur, I felt this pain. Having all these documents and no central place that everyone (board directors, shareholders, lawyers, auditors, regulators, etc.) could access 24/7, created further strain on my time.

      For a long time, I found apps that did only one thing but were not able to do all that I needed to meet my fiduciary obligations as an officer and director of my company.  It was very frustrating, but finally, in 2015 we launched the world’s first all-in-one platform—yes, an all-in-one platform—that takes care of everything I described above and so much more.

      Once you have a secure and centralized platform to bring your stakeholders, you have the assurance to meet your obligations and focus on growing the business rather than managing paper.

      No more duplicating your efforts – only do it once and KoreConX takes care of the rest.

      As you grow, the platform provides even further enhancement, so if you are a one person company or a company with 500,000 shareholders or more, KoreConX is your all-in-one platform.

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