All corporations, regardless of whether they are “C” Corps., LLC’s, or other forms of legal entities are required, by the laws of the state in which they are incorporated, to maintain adequate documentation, in the form of minutes of each shareholder meeting, special meetings, and director meetings. This requirement includes the written memorialization of any special resolutions of the directors made without a meeting, or by telephone, and signed by the Secretary.
The absence of proper, complete records may hold the shareholders personally liable, or the corporation may be held a nullity by state authority, even imposing personal liability on the shareholders and/or directors, including serious tax consequences! Such liability may also extend to the corporate shareholders, particularly where they are also directors, or where they have close family or business relationships to the corporation or its directors.
The laws of most states require corporations to hold annual meetings to conduct business, including shareholder’s meetings, and to elect directors. The bylaws of most corporations also require their board of directors to have an annual meeting, and although the board may delegate the day-to-day operations of the business to its officers or managers, many specific actions normally require approval by the board of directors. These may include, but are not limited to:
Many small corporations often conduct informal “meetings” where most business matters are decided. However, it is essential to prepare and maintain formal meeting minutes, and to obtain written consents, approving the actions taken.
Where a corporation has not maintained complete, written records as required, an experienced Attorney should be retained to assist in preparing lost or incomplete records, that will withstand official scrutiny.
“Happiness is nothing more than good health and a bad memory.”