Based on our observations, directors and officers are facing extra pressure in 2022–2023. Due to pressing business challenges, legislators and stakeholders require greater transparency and better involvement in solving ongoing problems.
Achieving and maintaining a quorum required for a board meeting in such an environment is more than just a requisite. It facilitates faster and better decision-making and helps avoid litigation.
For example, Walmart’s board and committee grew their attendance and shareholder engagement in 2023:
Let’s explore the nuances of this seemingly easy-to-follow rule to avoid additional problems. We’ll consider pitfalls such as remote attendance, loss of quorum, and persistent lack of quorum for board meetings.
What is a quorum for a board meeting?
According to Robert’s Rules of Order, a board meeting quorum is the minimum number of board members that must be present for a board meeting to be considered valid.
You also must have a quorum for voting and official business. A quorum prevents a few board members from acting on behalf of the entire organization.
Why do you need a quorum for board meetings?
The board of directors is a representative body. Shareholders and other stakeholders expect collective decisions. What’s more, all board members have accountability for the decisions made at the meetings. It is likely that those who are absent don’t want to take responsibility for the decisions they didn’t make.
Quorum requirements for board of directors meetings
Usually, you will find quorum requirements in an organization’s bylaws. In the absence of such provisions, a simple majority of members is the preferred approach. Exceptions may exist for certain types of organizations (e.g., government, HOA, or nonprofits) and local laws.
A board quorum may be defined as a ratio — “at least 50% of the board members constitutes a quorum” or a fixed number — “a minimum of seven board members“.
Besides percentage or number, quorum requirements may also include:
- The special type of members present
- A quorum for different types of meetings
- Remote attendance opportunities
- Exceptions to a quorum. In what cases there may be different rules
How to set a quorum for a board meeting
In case you haven’t yet declared a quorum ratio or number for your company, consider the following points when setting a quorum for a meeting of the board of directors:
- Determine a quorum by a majority until you set a customized number.
- Check your state’s legal requirements and any industry standards.
- Consider the organization’s size (the bigger an organization, the more members should be present) and the importance of the decisions being made.
- Track attendance before critical meetings to decide the correct board of directors for a quorum meeting.
- Identify key decision-makers and ensure their presence for impartial and comprehensive decision-making.
- Vote for a new quorum rule in your bylaws once you draft the rule.
Examples of quorum provisions in bylaws
Once you agree on the quorum details, it’s time to make it into a bylaws provision. In this section, we prepared quorum definitions from other companies’ documentation, so you will understand how it might look.
- Walmart’s Board of Directors quorum protocol states a quorum as the majority of the whole board. The exception is cases when a board needs to vote on adding a board member, or adjourn the meeting to another time and place.
- Meta’s Board of Directors quorum protocol requires a majority of the board at all board meetings. Only if a forum fails, the majority of the present members can postpone the meeting to another date.
- TRIO PETROLEUM’s Board of Directors quorum requirement states that not only a majority of all board members should be present but there also should be no less than 1/3 of authorized directors.
There is also a provision about the loss of a quorum — if some members were initially present and then leave, which entails a quorum loss, the remaining members still can make decisions. The quorum requirement, in this case, is that the majority of the board quorum approves them. Roughly speaking, they need positive votes of at least 1/4 of the board.
Proven approaches to reaching quorum for board meetings
Drawing on our own experience, a properly called meeting is crucial for sufficient representation, balanced decision-making, and compliance. If you struggle with attendance or want to sidestep the problem of attending meetings proactively, here are some best practices to follow:
- Take into account the key board members’ schedules and locations.
- Stick to the same scheduled meeting time and day. Voting board members will form a habit, it will be easier for them to plan the meeting.
- Review the meeting frequency. Too many meetings may overwhelm board members, so they may only attend sporadically and by shifts. Try grouping critical discussions and decisions in fewer meetings.
- Make the official part of meetings shorter. So it will be easier for members to insert the board meeting into their tight schedules.
- Send personal reminders several times before a meeting. For example, notify them two months in advance, two weeks prior, and finally, two days before the meeting.
- Share the board meeting agenda with board members in advance. This gives them a head’s up of what important points will be discussed. This effort also evokes a sense of obligation in the attendees.
- Have an opportunity for proxy votes in your corporate charter. Thus members can delegate their voting rights to another board member or person.
- Offer written corporate resolutions and board meeting protocols for routine or simple decisions with unanimous consent. In this case, members provide written consent to a proposed resolution. No physical meeting is required.
- Implement more flexible attendance options — allow members to join via video conferencing. Use board portal software to conduct smooth and secure meetings remotely. Make sure the attendees are comfortable with the technology and know how to use it properly.
- Talk to the board members to be aware of the optimal conditions for reaching a quorum.
How board portals can help with a quorum
Virtual board portals significantly contribute to boosting board productivity, including achieving a quorum. Board software allows you to:
- Hold virtual board meetings when all participants take part in the meeting remotely.
- Broadcast the meeting to remote participants, ensuring everyone stays connected.
- Automate notifications and reminders about upcoming meetings to save time while keeping everyone informed.
- Vote online for efficient decision-making. Hint: it is really useful even for in-person meetings.
- Exchange relevant documents and update them in real-time to avoid hundreds of email threads and downloaded files. As a general secretary or board chair, it also saves time in sending document updates.
- Asynchronously discuss less important issues via messaging to spend less time during official meetings.
- Sign written resolutions without a call or in-person meeting.
- Track attendance to understand a realistic number of directors present or red flags for a quorum rule review.
Check the top board portal providers overview and pick a solution that best suits your needs.
Dealing with lack of quorum and loss of quorum
Let’s assume you established a quorum number and started implementing quorum best practices. However, what to do if you don’t meet a quorum during a meeting?
Lack of a quorum occurs when a board meeting starts but doesn’t reach the minimum needed number of attendees. For example, they said they would present, but various circumstances prevented them from attending.
The loss of quorum happens when the required number of members is not initially present. For instance, someone leaves, causing attendance to drop below the stated quorum. For example, one of the members needs to take an urgent leave or take a break. If they are participating remotely, there might also be technical issues.
When a quorum is absent, the board chair can propose to:
- Quit the meeting and wait until the next meeting.
- Adjourn the meeting to a newly set date.
- Make an attempt to assemble a quorum. Call the absent board members and ask if they will be able to join later for a quorum.
In case of a loss of quorum, depending on the situation, a board chair can offer to:
- Pause the meeting until the necessary members return from work or personal-related breaks.
- Make a privileged motion — existing attendees conduct business, putting aside actions that need a quorum.
- Postpone a meeting if there is nothing on the agenda that could be done quorumless.
What if the lack of quorum is a persistent issue?
It’s okay if not all members can attend all meetings. Though if you struggle with a quorum in most meetings, it is a red flag you need to address. Here are some actions for you to take.
- Research the reasons for poor attendance. Maybe board meetings don’t align with board members’ availability and schedules, or they face challenges getting to an in-person meeting.
- Explore the options to attend meetings and vote remotely.
- Consider implementing a proxy voting system, so absent members can assign another member to act on their behalf.
- Try reducing the quorum. Mind that we are talking about cases when the number is too high, for example, close to 100%.
- Try increasing the quorum number. In some cases, it might work out. A higher number will increase the perceived significance and moral pressure on all members to attend.
- Communicate the value of quorum compliance and how poor attendance hurts an organization. Address any prioritization issues.
When to change a quorum number or ratio?
Thanks to our practical knowledge, inconsistent attendance is only one of the reasons to review the quorum number decided. Some other cases are:
- Your corporation is growing. You need a board to grow proportionally to reflect the increasing complexity of decisions.
- New quorum requirements in your state.
- Changes in organizational needs.
Once you update a quorum rule, vote on the entire new rule with a simple majority at the annual meeting or earlier in case of emergencies.
Bottom line
Now, let’s quickly summarize the article’s key findings:
- Quorum is vital for a board to operate effectively. Directors cannot perform their main duty without a quorum.
- The default quorum is a simple majority — half of your members plus one.
- Companies typically set customized quorum requirements in their bylaws.
- To establish a quorum, think about your state’s legal requirements, organization size, and key individuals needed for impartial and comprehensive decision-making.
- To improve board meetings attendance: set realistic requirements, uncover and address the root causes of poor attendance, utilize solutions such as proxy voting and virtual conferencing, and implement board portals.
