Your San Diego Corporation Minute Book: What Should be Included?
Corporate formalities are important. Remember that one of the main purposes of forming a corporation for your San Diego or California business is to take advantage of the corporation’s limited liability shield. That is, the owners of the corporation are shielded from being held personally liable for the corporation’s debts and obligations. But, as said, maintaining the corporate formalities are important, and a skilled and experienced corporate attorney can help. Among the formalities which must be kept are:
- Keeping the corporation in good standing with the California Secretary of State and Franchise Tax Board
- Issuing stock
- Appointing directors and officers
- Holding annual meetings of shareholders
- Holding regular meetings of directors
- No commingling of personal and corporate funds
- Use of corporate stationary and signing contracts as corporate officers
- And more
In addition, one of the more important formalities to maintain is to have a complete and organized corporate minute book. Here is why:
San Diego Corporate Law: The Importance of Your Corporate Minute Book
As with board minutes and minutes of shareholder meetings, your corporate minute book serves several important functions and is intended to “speak” to several important audiences. For example, if there is litigation, your minute book will be copied and read by lawyers, judges, administrative officials, and the like. Likewise, your minute book will be examined if your company ever comes under investigation for any reason by a governmental or taxing authority. In a similar manner, financial institutions and lenders will want to see the minute book. Finally, shareholders are legally entitled to review the minute book. Future shareholders, investors, and board members will also want to look at the minute book.
An incomplete or non-existent minute book is a “red flag” to many in this audience. In addition, an incomplete or non-existent minute book is one factor used by courts to evaluate whether to “pierce the corporate veil” and, potentially, hold the shareholders personally liable for corporate debts and obligations.
San Diego Corporate Law: What Should be in Your Corporate Minute Book?
As an aside, with small, closely-held corporations, a “minute book” is often literally a book — a binder into which various documents are enclosed. But, in truth, a “minute book” is generally a place where all the corporation’s important corporate-related records are kept. For large corporations, the “minute book” might be on a flash drive
In any event, every “minute book” should contain the corporation’s
- Articles of incorporation — all versions, including any amendments
- Bylaws — all versions, including any amendments and restatements;
- Resolution (if any) of the incorporator
- Minutes of shareholder meetings
- Minutes of board of director meetings
- Tax elections — election to become an S-corporation for example
- List of shareholders and number of shares held
- Stock transfer ledger
- Stock certificates and canceled certificates (for small corporations)
- Ledger with respect to payment for shares (again, mostly for small corporations)
- Annual Statements of Information filed with Secretary of State
- Fictitious business name statements (if applicable)
Call San Diego Corporate Law Today
For further information and help auditing and maintaining your corporate minute book, please contact Michael Leonard, Esq. of San Diego Corporate Law. Mr. Leonard has the experience to set up your corporation, review your bylaws and articles, draft minutes and help ensure that your corporation remains in good standing. Call Mr. Leonard today. He can be reached at (858) 483-9200 or via email.