Quorum
The minimum number of shareholders or directors required present for a meeting to be legally valid.
What is Quorum?
A quorum is the minimum number or percentage of shareholders or directors that must be present — in person or by proxy — at a meeting for the proceedings to be legally valid and for any votes taken to be binding. Corporate bylaws and state law specify quorum requirements for both shareholder and board meetings. For shareholder meetings, a quorum is typically a majority of outstanding voting shares represented in person or by proxy. For board meetings, a quorum is usually a majority of directors then in office. If a quorum is not achieved, the meeting cannot conduct business and must be adjourned to a later date.
Example
A company with 500 million shares outstanding typically requires a quorum of at least 250 million shares (50%) to be present or represented by proxy at its annual general meeting before any shareholder vote — including director elections, say-on-pay, or auditor ratification — can be legally conducted and recorded in the minutes.