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."
- 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 in order 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.
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.
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 up 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.