Frequently Asked Questions
What are Meeting Minutes?
“Corporate Minutes”, “Meeting Minutes” or just “Minutes” are simply the written record of decisions made for the entity.
To be protected by your corporation, LLC or LP you should hold at least one meeting every year. In order to reflect that you actually held an annual meeting you must write down what was decided, have all attendees sign, and your minutes are then placed in the corporate book (sometimes appropriately called a minute book) with all of your other formation documents. When the IRS comes calling during an audit or an attacker is trying to pierce the corporate veil, having your minute book in order is a huge help with these important corporate formalities.
Is notice of a meeting required?
Prior to a meeting of shareholders or members, all shareholders or members must receive or waive a notice of the meeting. Prior to a directors’ meeting, all directors must receive or waive a notice of the meeting.
Why is it important to hold meetings and keep minutes?
In meetings of either shareholders or directors, corporate formalities require voting and an official record of actions taken at the meeting. The official record of actions taken in meetings is provided as the minutes of that meeting. Minutes provide a record of the corporation’s resolutions. A resolution is a document that records actions that the directors or shareholders “resolve” to take on the corporation’s behalf. The nature and timing of the corporation’s decisions dictate whether a resolution or minutes of a meeting provide an appropriate record of decision.
By holding the necessary meeting and preparing the minutes, a corporation provides documentation to protect the corporate veil. Should a creditor seek to pierce the corporate veil at a later date, the corporation’s records will serve as evidence of its separate existence. In addition, maintaining proper records may help to avoid future miscommunications and misunderstandings within the corporation.
What should be documented?
Even if your corporation is run and controlled by you alone or by a small group of people, you should conduct meetings and prepare records of such meetings. Shareholders and directors conduct three types of meetings, which should each be recorded through minutes of meetings. The first type of meeting is the organizational meeting, which is held at the time of formation of the entity.
The second type of meeting is the annual meeting of directors/managers and of the shareholders/members, where directors are elected, officers are appointed or reappointed, the past and future of the business is discussed and voted upon, as necessary. Any major decisions or events of the past year are documented and any future events are documented and agreed upon.
Finally, the third type of meeting is the special meeting, which can be called for either directors or shareholders. Special meetings are usually called for by either directors or shareholders to deal with urgent business, such as merging with another entity, selling the corporation to another company or group of individuals, changing the authorized share capital of the corporation, or liquidation. In an LLC, a special meeting may be necessary to change members or to handle other urgent business.
All decisions a corporation or LLC makes and actions they take should be in compliance with the rules established in the Bylaws or Operating Agreement. Demonstrating that your corporation or LLC has complied with its Bylaws or Operating Agreement indicates that its directors, officers and shareholders or managers and members treat the corporation as a separate entity with its own rights and limitations. This compliance is also something a court will look at when deciding if your corporation has been operating as a true corporation, rather than a business shell. True corporations have true asset protection.
Can I prepare Meeting Minutes myself?
Yes, you can absolutely prepare your own minutes. If you formed your entity with Corporate Direct then you have received Garrett Sutton’s book, Bulletproof Your Corporation which has, among many others, templates for your annual meeting minutes as well as waivers of notice and special meeting minutes.
Here at Corporate Direct, we believe that following the corporate formalities is so important that we give you everything that we can to ensure that you can successfully maintain the standards necessary to ensure full asset protection.
With that being said, many people still find these tasks to be tedious and overwhelming – especially those who have multiple LLCs to maintain. Keeping track of what is due, and when, can be difficult and confusing for a person who is busy running a business – or multiple businesses. That is why we offer preparation of annual minutes as a service.
When you form your entity with Corporate Direct, you will be enrolled in our maintenance services offerings. Every year you will receive an invoice and checklist for registered agent service, annual minutes preparation, and any state filing fees due (some states require other than annual filings in which case you will be notified accordingly).
All you need to do is fill out our quick and easy annual minutes checklist and make your payment. We’ll do the rest to ensure your corporate formalities are in order!
Each state has an annual fee for corporations, LLCs, and LPs. Of course, the fees are an important source of revenue for the states. A major issue arises when the company fails to pay annual fees. The state has the power to revoke your company charter. Without a current charter someone later suing the company can pierce the corporate veil and pursue claims against the individual owners. By failing to keep your corporate charter in place due to nonpayment of the annual fees you are now personally liable for the company’s claims.
If you have formed an entity with Corporate Direct, or if we are your registered agent, you will receive a notice from us when it is time to file your annual report. All you need to do is pay the invoice and we’ll take care of the rest!