A natural person may do whatever is not forbidden by law, but a corporation may do only what is authorized by law and its charter. To what extent may corporations, the rules for which were developed generally in the 17th century, and limited liability companies, authorized in the 20th century, avail themselves of modern communication methods made available through technological advances?
When the governing body, or the “owners,” or both, of an artificial entity consist of multiple individuals, and decisions must be made collectively, consensus must be reached among the several directors, shareholders, members, or managers. Traditional corporate law required the directors to meet face to face, on due notice, and to vote on a proposal after discussion and debate. The face-to-face requirement was similar for shareholders’ meetings, except that unlike a director, a shareholder was permitted to give a proxy to someone else, whether or not a shareholder, to attend the meeting and cast the proxy giver’s vote. By the mid-20th century, when corporations had become a vehicle through which not only large enterprises, but also individuals and small “partnerships” did business, legislatures (New Jersey did so in 1960s) modified the requirement for face-to-face corporate meetings. Both directors and shareholders were authorized to “act” by unanimous written consent. Shareholders were also authorized to act by non-unanimous written consent on notice to all others. Directors’ “meetings” were authorized to be held by means of conference telephone so long as everyone could hear each other.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Not a Bloomberg Law Subscriber?
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]