When A Meeting Of Directors Is Not Meet

In many closely held corporations, the directors may work side by side nearly every day.  If they all meet  and discuss some action, does that count as a meeting of the board of directors?  

While the California General Corporation Law does not define what constitutes a meeting of the board, it does impose procedural requirements, including a call (§ 301(a)(1)), proper notice in the case of special meetings (§ 301(a)(2)), and the presence of a quorum (§ 301(a)(7)).  The GCL also prescribes the manner by which acts or decisions are made at meetings ((§ 301(a)(8)).   An informal meeting of the directors would likely not meet these requirements and thus would not constitute a meeting of board.

In Fogel v. U.S. Energy Systems, Inc., 2007 Del. Ch. LEXIS 178, Chancellor William Chandler ruled:

"The mere congregation of a corporation's directors in the same room does not necessarily result in a board meeting, and the mere fact that three out of four directors determined how they wished to proceed does not obviate the need for adherence to bylaws and the [Delaware] General Corporation Law."

In reaching this conclusion, Chancellor Chandler noted that there had been no formal call to the meeting and no vote whatsoever.   No California court has cited or adopted Fogel in a published opinion, but both states prescribe similar formalities vis-a-vis board of director meetings.