Q: I'm looking for some help on the proper procedure or protocol for holding corporate meetings and keeping minutes. Do you have any information you can offer?
A: Most business owners like to focus on improving products or services, snagging capital in the next round of financing and developing a growth strategy. Besides these big-picture items, however, there are details you can't ignore if you want to keep your business in line with state laws and back up your tax returns.
The "corporate paperwork" you need to be aware of includes meetings and minutes. The details for how and when to handle these are somewhere in your state's business statute, so take a few minutes to look them up. (Try www.findlaw.com or www.uslaw.com.) They should also be in your bylaws, which contain specifics of how your company is run. Although corporate law varies from state to state, there are some basics that apply across the board:
- Annual shareholders meeting. Once you have a quorum (minimum needed to hold a meeting), shareholders elect directors and conduct any other business on the agenda. In most states, you don't have to have an actual meeting if all shareholders agree to the action by unanimous written consent. A shareholder who can't be there can give a proxy (permission to vote) to another shareholder.
- Annual directors meeting. As with the shareholders meeting, this can be conducted by unanimous written consent rather than through a physical meeting. Directors nominate and elect officers, deal with officer pay and do whatever else needs doing.
- Special meetings. These can be held by either shareholders or directors to deal with specific issues (for example, borrowing money or selling assets). The proposed action is contained in a "resolution." Again, shareholders or directors can give unanimous written consent to an action instead of meeting.
- Minutes. These are a record of what actions were taken on behalf of the corporation. They're taken by the secretary, approved by the shareholders and filed with the corporate records. Minutes record who was at a meeting, who presided, where and when the meeting was held, and what business was done. Sample minutes are available in many form books. Typical events recorded in minutes include things like mergers and the sale or purchase of corporate assets.
Because most entrepreneurs rank paperwork right up there with scouring the coffee pot on the list of things they'd like to do with their workday, help has arrived. You can buy corporate "kits" containing everything from a corporate seal to share certificates and minutes paper.
Meetings and minutes may seem annoying, but they're just part of record-keeping. Learning the basics and following formalities will keep your business out of trouble and document just how your brilliant officers and directors made all that money.
Joan E. Lisante is an attorney and freelance writer who lives in the Washington, DC, area. She writes consumer-related legal features for The Washington Post, the Plain Dealer, the Spokane Spokesman-Review and the Toledo Blade (Ohio). She is also a contributing editor to LawStreet.com and ConsumerAffairs.com. In her practice, Lisante is counsel to ConsumerAffairs.com and was counsel for Zapnews, a fax-based customized news service for radio stations. Previously, she served as Assistant District Attorney in Queens County, New York, and Deputy District Attorney in Nassau County, New York.
The opinions expressed in this column are those of the author, not of Entrepreneur.com. All answers are intended to be general in nature, without regard to specific geographical areas or circumstances, and should only be relied upon after consulting an appropriate expert, such as an attorney or accountant.