What Is a Quorum?

A quorum refers to the minimum acceptable level of individuals with a vested interest in a company needed to make the proceedings of a meeting valid under the corporate charter. This clause or general agreement ensures there is sufficient representation present at meetings before any changes can be made by the board.

A quorum normally consists of a group that is considered as large as possible to be depended on to attend all corporate meetings, which is a qualitative assessment. The plural of a quorum is "quora."

Key Takeaways

  • A quorum is a minimum level of interest or attendance required before an official meeting or action can take place.
  • Companies often stipulate the quorum required among shareholders to make decisions, spelled out in the corporate charter.
  • A quorum could be a simple 51% majority or some more specific or complex arrangement.
  • Several guidelines exist that companies can draw upon to determine the appropriate formula for their quorum.
  • When a quorum is not met during a meeting, the existing attendees are still allowed to conduct certain actions according to Robert's Rules of Order.

How a Quorum Works

Since there is no strict number that constitutes a quorum, best practices suggest a quorum is established as a simple majority of members within an organization. It is also possible to outline a hard number in the by-laws of a company, in which case it overrides the simple majority if that number is larger. It is important that the number decided on is not so small that it doesn't accurately represent the entirety of the members, but not so large that it becomes hard to legally hold a meeting.

Regardless, the quorum number should be representative of members in a decision-making role. If, for example, a company has ten board members, a quorum could be a simple majority of six board members rather than 51% of every shareholder in the company.

The number decided on should not be so small that it doesn't accurately represent the entirety of the members, but not so large that it becomes hard to legally hold a meeting.

Robert’s Rules of Order

The idea and guidelines of a quorum were set by "Robert's Rules of Order." These rules were implemented to help protect organizations from the decision-making power of a select few who might be uninformed or duplicitous. However, when a quorum is not met during a meeting, the existing attendees are allowed to conduct up to four actions on behalf of the company.

First, when a quorum is not met, attendees of a meeting can adjust the established time for the meeting's adjournment. Doing so allows the company and its members to reschedule the existing meeting to a later date when more people can attend.

Second, the existing attendees can simply adjourn the meeting and try again at an upcoming meeting that is already scheduled. This occurs if there were regularly scheduled budget meetings, for example, and the posed budgeting decision is not time-sensitive.

Third, and the least painful action is a simple recess in which the existing members of a meeting pause for a break in the hopes additional members show or are rounded up. This normally happens if some members leave on their own for a break, and a quorum is not met mid-meeting. Finally, a privileged motion can be called under special circumstances where additional measures can be taken to establish a quorum. A committee can be formed, for example, to call absent members.

Examples of a Quorum

Microsoft's Quorum

Microsoft (MSFT) has established quorum rules for its shareholders and board of directors. The company's bylaws state that the shareholders' quorum is the "majority in interest of all the shares entitled to vote on a matter." Generally, when voting, whatever the majority of the quorum votes for is approved.

The date for the shareholders' meeting is stated in a company's bylaws and occurs on the same date each year.

For the Board of Directors, a quorum is the majority of the members of the Board. When a quorum is present during a meeting, the majority of members in attendance are permitted to decide on questions brought before them, except for those otherwise restricted by the company's bylaws. If the quorum is not present during a meeting, the members in attendance can adjourn the meeting.

Apple's Quorum

Concerning its shareholders, Apple (AAPL) defines its quorum as the majority shareholders in attendance, in person or by proxy, who are entitled to vote on related matters. Shareholders can transact business when a quorum is present until adjourned. If during that meeting, there are no longer enough shareholders to constitute a quorum, the meeting may continue and decisions can stand if approved by a majority of the shares required for the quorum.

Apple's quorum of Directors is the majority of the authorized number of directors. Decisions made by a majority of the directors when a quorum is present are approved. Transactions may continue when the quorum is initially present but later dismissed if the majority of the quorum approves. The meeting may be adjourned by the majority of directors present even if the quorum is not.

Quorum FAQs

What Is a Quorum in the Senate?

The U.S. Constitution requires that at least 51 senators be present to do business.

What Is a Quorum Call?

A quorum call is a rule that states that members or a number of members of a governing body must be present to pass a vote.

What Is a Quorum Court?

A quorum court is a governing body's legislative body. The members of the group make up the segments of that government and serve to transact business and review various legislations.

What Is a Rolling Quorum?

A rolling quorum is one in which all required members need not be at the same location at the same time to meet the requirements for the quorum. For example, some members may be in person, while some may be on the phone/conference call.

Is a Proxy Counted in a Quorum?

In general, a proxy is counted in a quorum unless the organization's bylaws prohibit it.

What Is Quorum in Blockchain?

Quorum in the blockchain is an open-source protocol where one member owns all nodes in a private blockchain network or where several members own nodes in a consortium blockchain network.

Why Did JP Morgan Sell Quorum?

JP Morgan sold Quorum because it was unprofitable.  They concluded that businesses were not interested and would be unable to use the Ethereum-based system.

The Bottom Line

A quorum is the minimum number of people needed to hold meetings or make decisions during certain company meetings. Most often, the quorum is considered the majority of members within a group or organization. A designation too small risks inadequately representing the whole, and a designation too large risks the inability to hold meetings and make decisions. Robert's Rules of Order provide a blueprint from which organizations can form their quora.

Article Sources

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