The quorum is a quantitative indicator that identifies the number of votes by which the board members of the business entity were established. If the required number of participants does not meet its criteria, then the meeting cannot be held due to a lack of legal force. So, what is a meeting quorum, and in what situations does it apply?
The essence of quorum in the meeting
The quorum determines the minimum number of participants in the event, sufficient to make a competent decision on the issues on the agenda. The head of each business entity develops local acts that regulate the minimum threshold for meeting participants, and if not reached, the event cannot be implemented. The parameter is applicable only if it is necessary to make important decisions that affect the company’s functioning.
In practice, the total number of votes can be calculated as the number of people who came to the event or as a percentage of members present to their total number. A different quorum can be applied to decide at a meeting of owners to resolve issues of varying importance.
The order of the event and its nuances are regulated by the company’s charter, drawn up following the law. When held in the presence of a smaller number of people, the decisions have no legal force. For this reason, before starting a meeting, you must ensure that the right number of participants are present. The optimal quorum value is 2/3 of the total number of persons eligible to vote. Only half of the total number of participants is sufficient to resolve some issues.
Why was the concept of quorum introduced?
It is a tool for making an objective and quick decision that will satisfy most stakeholders. Meetings can be held only when a quorum is reached; if this does not occur, all decisions will be invalid. For this reason, it is necessary to adhere to the norms indicated in the sources, under which it is possible to resolve issues of different nature and significance. The law determines that financial and property matters must be resolved by all members who are part of the board.
The quorum must be fixed in the following sources:
- The founding documents of the company.
- In the regulation of the municipal authority.
- In law.
The quorum for the meeting is calculated once. First, it determines the eligibility of the meeting to consider all issues on the agenda. The quorum for deciding on the topic of the agenda is calculated concerning each issue on the agenda of the meeting, if the composition of voters on these issues differs, and determines the eligibility of the meeting to consider only this specific issue. At the same time, the absence of a quorum for deciding on issues voted on by one composition of voters does not prevent the adoption of a decision on issues voting on which is carried out by another composition of voters, for the adoption of which there is a quorum.
Conditions for making an actual decision without a quorum
To simplify the paperwork process, some enterprises develop and approve regulations that determine the possibility and conditions for holding a legitimate meeting with a smaller number of participants.
If the required number of persons with the right to vote is not reached before the start of the meeting, the event may be held. However, to confirm the relevance and legal force of the earlier decisions, it will be necessary to organize another meeting at which the quorum rules must be observed. It must confirm previous decisions. However, in practice, such a scheme for conducting events is cumbersome and troublesome; therefore, most often, it is not used.