It is that time of year again; businesses are end-of-year planning for taxes, finances, and budgets. In the flurry of tying up loose ends for the previous year and planning ahead for the next, one important item generally gets overlooked by business both large and small: Corporate Annual Minutes.
Preparation of a company’s corporate minutes should be an annual ritual the same as the filing of a company’s annual income tax return. It is a statutory requirement in North Carolina, and in most other states, for both corporations and limited liability companies to hold an annual meeting, or to adopt and ratify actions by executing official annual minutes, of the Shareholder and Board of Directors for a corporation and the Members and/or the Managers of a LLC. Failing to hold an annual meeting, or to adopt official annual minutes of the company, could put at risk a company’s legal standing as a corporation or LLC. Further, it can result in the loss of the liability protection offered by the “corporate veil”, and can have negative impact on the legal standing of the company’s owners, directors, officers, and even employees by exposing their personal assets in the event of a lawsuit.
There are a vast number of items that should be included in the annual minutes. Acceptance of prior meeting’s written minutes, election of Managers in a LLC, election of Directors and Officers in a corporation, ratification of significant actions, approval of bonuses, approval of loans or large purchases, approval of the sale of company property, and approval of dividends are just a few items that should be included in the annual minutes.
In North Carolina, it is not required to hold an official, or in-person annual meeting. The General Statutes allow for ratification of actions without meeting by adopting official annual minutes with the unanimous written consent of the Shareholders, Directors, Members, or Managers. This type of annual minutes is typically the desired option for many of our clients, and we can assist in the preparation of these annual documents to help maintain your company’s “corporate veil”.