Importance of quorum
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A quorum is the minimum number of votes required to make legally binding decisions. Most often, it is enough for more than half of those eligible to vote to gather. Or a qualified majority exceeding two-thirds (three-quarters) of those present.
Votes are counted in absolute or percentage terms. The chairman of the meeting can take into account all the people who came to the meeting, or calculate the percentage of those present from the total number of society participants. The choice of method depends on the type of issues being resolved. The local acts of each organization contain a set of rules that establishes the minimum required to hold a meeting in accordance with legislative standards.
Fact! Thus, a quorum is the smallest number of people to approve important decisions that can affect the work of the organization. Its necessity lies in the fact that if there is an insufficient number of participants, all approved decisions are deprived of legal force.
Before holding a meeting, the organizer notifies all potential participants in writing. They must register within a specified period. Once everyone has registered, the counting commission will count those who came to the event. If they are insufficient, the meeting will be held formally or postponed. Electronic accounting technologies are used to count those present, which simplifies the process.
Why was the concept of quorum introduced?
Having understood the concept of quorum and what it is, it is important to understand why it was introduced. The law determines that the parameter is necessary to ensure the relevance of the decision made in the future and the impossibility of challenging it. In conditions of non-compliance with the regulations, a small number of participants can vote on what is important for the activity and development of a business entity. Other persons who have the right to vote, but for some reason did not appear at the event, may disagree with the decision made. They have the right to challenge it. And if the majority of participants record such an opinion, then the previously held meeting will be considered illegitimate.
Drawing up the minutes of the general meeting
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Not a single event of this kind is complete without a protocol - it contains information about the issues that are on the agenda, briefly or in detail. The first type displays only data about the persons who spoke at the meeting, while the second type of document contains information about all speeches. Each company has the right to independently choose the type of logging. Usually the manager is responsible for this or the decision is made by agreement of all participants.
The protocol is drawn up in accordance with current office work standards based on state standards. If they are not observed, then, despite the quorum, the document may lose legal force. The official sheet requires mandatory display:
- company name;
- legal form;
- dates and protocol numbers;
- place and time of the event;
- type of meeting, form of negotiations;
- list of those present;
- agenda;
- voting results;
- decision making;
- signatures of all participants.
The first four points are written in the header of the document. When registering, you will need to indicate the full name of the organization, as in the constituent documentation of the enterprise. The abbreviated form, the abbreviation is entered only after it. Any other option will be considered a gross mistake. The document number must be similar to the serial number of the general meeting during the calendar year.
In the process of compiling the title, the type of event is prescribed - it is annual, planned or extraordinary. Negotiations in their form can be face-to-face or absentee. If any other meeting type is specified, it is not considered an error.
The content is made up of sub-items, each of which contains a specific issue on the agenda. If there is documentation that requires consideration at the meeting, the sheets must be numbered and attached to the minutes.
If some point was not included or was not sufficiently disclosed, the regulatory authorities may consider the act legally insignificant.
About the preparation of the protocol - in the video:
When should the meeting be held?
The next general meeting of participants must be held within the time limits established by the charter. However, it cannot be carried out less frequently than once a year to approve the annual results of the LLC’s activities.
The annual meeting is held no earlier than two months and no later than four months after the end of the financial year (Article 34 of Law No. 14-FZ).
Important! That is, the annual regular meeting must be held before April 30 of the current year. And this is not a whim of the participants, but a mandatory norm of the law.
What to do if there is no quorum
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Correct registration is required even if all potential assessors fail to appear and the meeting is not held because of this. In the registration sheet or journal for participants, dashes must be placed opposite the names of those who did not appear in the “signature” column. The document must be signed by the organizer of the meeting (usually the general director), after which a seal is affixed. The sheet must certainly be attached to the minutes of the meeting.
Fact! If people come, but the number is small for a quorum, the event is still opened and the participants are registered. This is because the voting “limit” varies for different issues. And perhaps there will be enough people who came to form a quorum to solve at least one of the problems.
If this does not happen, the meeting becomes absentee. In this case, the organizers need to issue a certificate of absence of quorum at the in-person event with confirmation in the form of registration sheets. Next, a decision is made to conduct the procedure without the personal presence of the participants. If the event is part-time, but few people came, it is still held. Those present are given ballots, which are analyzed after the end of voting. Then the votes of the “absentee” voters are counted. The quorum is determined based on the results of both parts of the event, the results are recorded.
The problem of achieving a quorum in parliament
Unfortunately, even government agencies do not always comply with legal requirements. In the early 2000s, information began to regularly appear in the media that State Duma deputies were shirking work.
To make decisions in a law-making body, a quorum has always been required.
However, in practice, many deputies did not come to meetings and handed over registration cards to their faction colleagues.
In the hall, it was clear to the naked eye that a quorum had not been reached, although the electronic system showed the opposite. As a result, the deputies present had to run around the rows and press buttons, voting for the rest.
In 2010, REN, BBC and Spiegel published sensational news: a bill on a complete ban on drinking alcohol while driving was passed by only 88 people. This is exactly the number of deputies that were actually present in the hall at the meeting. Although the vote counting system showed the result “449 out of 450.”
From a legislative point of view, if there is no quorum, voting is postponed to the next meeting.
This information is also available on the website of the State Duma of the Russian Federation in the “Activities” section.
Quorum Features
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A general meeting can only take place if a quorum is present, otherwise all decisions that were made at it will be invalid. When making calculations, you should follow the standards regulated by the Civil Code of the Russian Federation in order to avoid misunderstandings.
General provisions
At least 50 percent of the total number of securities holders with voting rights must take part in meetings of the founders of a joint-stock company. Before starting, be sure to check whether this half of the shareholders is available. If yes, then the meeting is legal. When voting, all those present are counted as 100 percent, and those who do not come are simply not taken into account. That is, in fact, the decision can be influenced by a little more than a quarter of the community members who voted “for” or “against”.
Fact! The assembled property owners do the same at meetings on the problems of property management of an apartment building.
But according to the Federal Law “On LLC”, decisions must be made differently: by a majority vote of the total number of members of the organization, and not just those participating in the event. That is, those who did not come to the meeting are also taken into account. If there are not enough people for a quorum at an LLC event, this is equivalent to the lack of the required number of positive votes.
Quorum counting
Quorum indicators may vary within the same company depending on matters of varying importance. Thus, in an LLC, in order to open an enterprise, approve or change the charter, or rename the property of the authorized capital, at least two-thirds of the votes are required. But financial and property problems, as well as moments of reorganization and closure of the company, are resolved only by all members of the board of the company. To resolve all other issues, 50 percent of the participants are sufficient.
The number of those gathered is determined by:
- before the start of the event during registration actions (participants are counted by a commission created to count votes);
- through an electronic system;
- at the request of any member of the company.
In accordance with the Housing Code, a quorum at meetings of homeowners is considered incomplete if less than half of the possible participants have appeared. To determine the percentage of votes, you need to multiply the share of each person by 100 and divide by the total area of the house. In most cases, a formula is used in which 1 sq. m corresponds to 1 vote. Therefore, owners of large apartments automatically have more weight in the calculations.
A meeting of a joint-stock company is valid if shareholders owning more than half of the securities participate. This is called presence quorum. When holding a second meeting with the same agenda, the number of sitting members may be reduced to 30 percent. The charter of a joint stock company with more than 500 thousand shareholders may quite legitimately provide for a smaller number of participants. As for the quorum for decision-making, it also depends on the type of issues on the agenda. For example, the establishment of a company, transformation into a non-profit partnership, approval of property rights, and valuation of shares require one hundred percent of the votes. Most other issues are decided by a qualified majority. That is, at least ¾ of the votes are required.
If one of the owners of voting shares is prohibited by the court from taking part in voting, his securities are still taken into account when determining the quorum.
The need for a quorum provision in the charter of an enterprise
Members of the company's board do not have the right to reduce the number of participants at will - the law prohibits such actions. But they have the right to make changes to increase the indicator, up to one hundred percent presence, which must be reflected in the statutory documentation.
Most often, such points are included in the Charter regarding important issues:
- digital values and transactions with parts of the authorized capital;
- changing the name and address of the organization;
- accepting new participants.
In these cases, it is quite acceptable to change the quorum upward.
Problems that you will actually encounter in achieving quorum
In the process of discussing serious issues, doubts often arise about the accuracy of the vote count. This problem arises when the quorum parameters in the organization’s charter turn out to be vague and incorrect.
Also, those who are not satisfied with the decisions made may doubt the integrity of the counting commission. Most often, such disputes arise at the level of financial relationships in a joint-stock company, since shareholders often have their own, even opposing interests. In such cases, the forum is recognized as legitimate and the legality of the decisions made at the meetings is determined in court.
Making decisions on agenda items
The presence of a quorum at a meeting does not guarantee that a decision on each item on the agenda will be made.
To resolve some issues, a majority of votes from the total number of votes of the owners taking part in the meeting is sufficient, that is, 50% of the total number of votes of all owners in the house + 1 vote is sufficient, provided that the meeting has a quorum.
To make decisions, for example, related to the overhaul of apartment buildings, a number of votes of at least 2/3 of the total number of votes of the owners is required, therefore the number of meeting participants to ensure a quorum may be insufficient to make decisions on such issues.
Consequences of decisions when there are insufficient votes for a quorum
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If the required number of people was not gathered, everything that was adopted at the meeting may turn out to be voidable or void according to the Civil Code of the Russian Federation. Most often, decisions on invalidity are made by the courts due to the fact that the procedure for convening was violated or a quorum was not reached. And not only because potential assessors did not appear: they did not want to or were not notified, but also because of failure to comply with the requirements established by law. For example, making a decision without the required number of voters on certain issues with a sufficient quorum of presence.
Fact! Even if the plaintiff missed the limitation period, this is not an obstacle to the decision being invalidated if the original one was void.
However, if the contested decision was approved over time, complying with all legal requirements, the court will reject the claim. Under such circumstances, the first option is not considered void according to the provisions of paragraph 2 of Art. 181.4 of the Civil Code of the Russian Federation. Also, if it is established that the failure to appear at the event was intended to sabotage the decision, the court will not recognize it as void. The claim will also be denied to the person in whose absence the meeting was held, if the approved questions did not bring him unpleasant consequences.
Negative consequences for a manager for not holding an annual meeting
For failure to hold an annual meeting, not only LLCs, but also their managers can be held liable. The fine for managers can range from 20 thousand to 30 thousand rubles (clause 11 of article 15.23.1 of the Code of Administrative Offenses of the Russian Federation).
For example, if the director of an LLC did not hold a meeting of the LLC or held the meeting later than the deadline, then he also faces a fine. At the same time, the courts do not consider this offense to be insignificant, despite the absence of adverse consequences, major damage or other property damage (Decision of the Kirov District Court (Primorsky Territory) dated January 21, 2020 No. 12-5/2020). And the minimum punishment is 20 thousand rubles.
Negative consequences for LLC participants
If the LLC violates the terms and procedure for holding the next meeting of participants, then the decisions made at it may be challenged and declared invalid.
For example, extracts from the minutes of general meetings of an LLC reflect the adoption of decisions that were not included in the agenda, including the approval of a new edition of the company’s charter; decisions were made in the absence of the required quorum, and therefore, these decisions of the general meeting have no legal force and are void (Resolution of the AS of the West Siberian District dated July 15, 2020 No. A03-11179/2019).
