As we are nearing the end of 2013, if you have not done so already take some time to prepare the necessary annual documentation for your company. For corporations, annual meetings and minutes are generally required by law, and for other forms of business entities (limited liability companies or partnerships) annual meetings and minutes are certainly recommended.
For corporations you want to document, at least on an annual basis, the meetings of both the board of directors and the shareholders. The minutes for the board of directors meeting should provide and set forth at a minimum:
- that the board of directors has met and is making the necessary decisions regarding the management of the company;
- the officers of the corporation that have been elected by the board of directors for the upcoming year;
- that any and all major business decisions that have been made by the board of directors prior to the date of the meeting are ratified and approved; and
- any known or expected major upcoming business decisions.
The minutes for the shareholders should provide and set forth at a minimum:
- the election of the board of directors;
- the ratification and approval of all major business decisions that have been made prior to the date of the meeting that require shareholder consent; and
- any known or expected upcoming major business decisions that require shareholder consent.
The more comprehensive that your minutes are, the less of a chance that decisions and actions can be challenged in the future by disgruntled shareholders. Make certain that you follow the protocol set forth in your corporation’s bylaws for proper notification and voting procedures at all meetings as well as any legal requirements in the state where your corporation was formed. If the board and directors and/or the shareholders have waived the meeting notification requirements set forth in the bylaws or at law, make sure that the waiver is documented in the minutes.
If your business operates through a limited liability company (LLC) you may have chosen such an entity to avoid some of the formal corporate requirements like annual meetings and minutes. With that being said, it is still advised that you do hold annual meetings of the members and managers and document the same for two very important reasons, even if the law or your organizational documents do not require them:
- if a dispute arises in the future between the members, the minutes can serve as documentation for decisions that have been made; and
- having documentation that certain corporate-type formalities have been followed provides support in the event that an attempt is made to “pierce the corporate veil” and shift liability for the obligations and debts of the company to the LLC members.
If you need assistance with either creating a template for company’s annual meetings or actually preparing your company’s minutes each year, our corporate team can assist you.