Community Bank CEOs: How to Get Your Shareholders to Vote Yes on the Merger
You've negotiated the deal.
You've signed the definitive agreement.
You've made the announcement.
Now you need your shareholders to approve it.
This is one of those moments where preparation from years ago either saves you or haunts you. Your corporate documents matter.
The process matters.
And how you communicate matters.
Let's walk through how to get this done right.
Start With Your Corporate Documents
Your legal counsel will guide you through calling a special shareholder meeting.
They'll tell you exactly what needs to happen and when.
But here's what they're really doing: They're reading your corporate documents.
Your articles of incorporation, bylaws, and shareholders agreements spell out the rules.
For both your bank and your holding company if you have one.
These documents tell you:
- How to call a special meeting
- How much notice shareholders need
- What percentage of votes you need to pass
- What happens if you don't get enough votes the first time
If you're reading this and haven't looked at your corporate documents in years, that's a problem.
Go find them.
Read them.
Understand them.
Here's my advice: Don't wait until you're selling to review these documents.
Do it now.
Even if you have no plans to sell.
Why?
Because you need to understand them for more than just selling.
You need them for:
- Acquiring another bank
- Raising capital
- Issuing subordinated debt
- Any major corporate action
Add corporate document review to your annual board review of your capital plan.
Make it a regular thing.
Update Your Documents If Needed
While you're reviewing your corporate documents, look for outdated provisions.
The big one?
Electronic delivery of proxy materials and meeting notices.
Many states updated their laws during COVID to allow electronic delivery of corporate documents.
If your bylaws don't address this yet, talk to your legal counsel about updating them.
Why does this matter?
Electronic delivery is better in every way:
- Costs less than printing and mailing
- Gets to shareholders faster
- Allows you to track who opened what and when
- Lets you send reminders easily
- Gives you date and time stamps on responses
- Results in higher response rates
Most shareholders prefer it anyway.
We all live in an electronic world now.
You can even send electronic voting cards.
Shareholders can vote from their phone or computer.
You get instant confirmation they received it and voted.
But shareholders have to consent to receive materials electronically.
The sooner you set this up, the better.
Consider doing it at your next annual meeting.
What Shareholders Vote On
At the special meeting, you're asking shareholders to vote on two things:
First: Approve the merger transaction.
Second: If needed, allow extra time to gather more votes to meet the approval requirements.
That second item is your backup plan.
If you don't get enough votes on the first attempt, you need the ability to extend the voting period and keep gathering approvals.
What Goes in the Proxy Materials
Your experienced legal counsel will guide you on exactly what to include.
But generally, your proxy materials will cover:
Meeting Information:
- Details about the special meeting
- Voting rights and what vote count you need
- How to vote
- How to revoke your proxy if you change your mind
- How the solicitation process works
- The board's recommendation
Merger Proposal Details:
- Description of what's being proposed
- What shareholders will receive (the merger consideration)
- Background and reasons for the merger
- The fairness opinion from your financial advisor (if you got one)
- What regulatory approvals are needed
- Tax consequences of the merger
- Appraisal rights shareholders have
- Any interests board members or management have in the deal (like Change-in-Control or Stay-Put agreements)
- Board recommendation again
Definitive Agreement Details:
- Structure of the merger
- Effective date
- How stock will be treated
- Process for exchanging stock certificates
- Representations and warranties both sides made
- How business must be conducted during the waiting period
- Confirmation that you can't solicit other buyers
- Employee benefits information
- Other negotiated covenants
- Conditions that must be met before closing
- Termination fees if the deal falls apart
- Who pays expenses
- How the merger affects shareholder rights
- Any voting agreements or restrictive covenants board members and management signed
Ownership Information:
- Number of shares owned by board members
- Number of shares owned by executive officers
Supporting Documents:
- Full copy of the definitive agreement
- Full copy of the fairness opinion
- Financial statements
Compliance Items:
- Anything required by state or federal law
That's a lot of information.
Your legal counsel will help you organize it all properly.
The proxy materials serve two purposes:
They give shareholders everything they need to make an informed decision, and they meet all legal requirements.
Consider Electronic Meetings Too
Some states and corporate documents now allow fully electronic shareholder meetings. You don't even need a physical location.
If your state allows it and your corporate documents permit it, consider this option. It makes voting easier for out-of-state shareholders and increases participation.
If state law allows electronic meetings but your bylaws don't, add that to your list of updates to make at the next annual meeting.
I'm a big advocate for using electronic communications throughout this process. It's faster, cheaper, more trackable, and shareholders prefer it.
Talk to your legal counsel about what's possible in your situation.
After the Vote: Communicate Immediately
Once your special meeting concludes, tell all shareholders the results right away.
If you have electronic communication set up, send an email immediately after the meeting. Share:
- The voting results
- What happens next
- Timeline for closing
- What shareholders should expect
- This approach accomplishes several things:
Saves time:
Shareholders don't have to call or email asking for results.
You don't have to field dozens of individual requests.
Shows respect:
You're treating shareholders as partners in the process, keeping them informed in real time.
Provides documentation:
Email is trackable.
You know who opened it and when.
You have proof you communicated.
Answers questions proactively:
Many shareholders will have the same questions.
One well-written email addresses them all at once.
This simple step goes a long way toward shareholder satisfaction.
The Regulatory Approval Timeline
While you're preparing for and holding your shareholder meeting, regulatory approval is happening in parallel.
You might get regulatory approval before your meeting. You might not.
That's okay.
Don't wait on regulators to schedule your shareholder meeting.
Shareholder approval can be conditional on regulatory approval.
The vote can happen first, with the understanding that closing depends on regulators saying yes.
Your legal counsel will structure this correctly in the proxy materials.
The Preparation That Pays Off
Here's the reality:
Getting shareholder approval should be straightforward if you've done the work in advance.
If your corporate documents are current and clear, the process flows smoothly.
If you've set up electronic communications already, you save time and money.
If you've maintained good relationships with your shareholders, they trust your recommendation.
If you've kept board members informed throughout the sale process, they're advocating for approval.
But if you're scrambling to update bylaws, figure out outdated procedures, and explain yourself to surprised shareholders?
The process gets messy fast.
Start Preparing Now
Even if you're years away from selling, get familiar with your corporate documents today.
Know what they say about:
- Calling special meetings
- Voting requirements
- Electronic communications
- Meeting formats
Ask your legal counsel to review them annually.
Update anything that's outdated.
Add electronic delivery provisions if they're not there.
This isn't just about preparing to sell.
It's about running your bank professionally and being ready for any major corporate action.
The Bottom Line
Getting shareholder approval is a formal process governed by your corporate documents. Electronic delivery of proxy materials and electronic voting make the process faster, cheaper, and more efficient. Communicate results immediately after the vote. Most importantly, review and update your corporate documents now—long before you need them—so the process runs smoothly when the time comes.
P.S. I'm not a lawyer, an accountant, or an investment banker. Just a former bank CEO who has been in your shoes.
There are zero hacks or tricks in this newsletter. Just proven tactics that help you choose the right path for your bank.
Your path will:
- Inform your strategic plan.
- Guide your annual business plan and budget.
- Clarify priorities.
- Define your message so it can be communicated with confidence.
This is how savvy bankers navigate.
They build smart and valuable banks and choose the best time to sell on a timeline of their own choosing – serving the needs of the shareholders and the board.
I hope you found this short lesson helpful.
What are your thoughts?
I’ll see you next week.
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