State corporation law and the corporation’s own bylaws set the rules by which a corporation holds valid meetings, takes valid corporate actions, and keeps corporate minutes. An organization’s legal standing as a corporation
is risked if a corporation fails to hold corporate meetings documented by the corporation’s minutes.
Piercing the Corporate Veil
Corporations are often formed for purposes of protecting shareholders from liability. If formalities
are not followed, the corporate veil can be easily “pierced” by a court, resulting in personal liability for the shareholders. Lack of adherence to corporate formalities (including holding an annual meeting evidenced by annual minutes) is a primary reason why courts may pierce the corporate veil.
Note: Generally, corporation law varies by state. The general concepts of how to properly call a meeting, give adequate notice, and correctly record corporate actions taken are often the same. However, the specific requirements may vary by state or the corporation’s own bylaws. Therefore, this information is to be used
as a basic guideline only, and care should be taken to check compliance with state law and the corporation’s bylaws.
General Requirements for All Corporations
Requirements for meeting minutes are fairly simple for one shareholder corporations, but must still be kept in order to retain corporation status. Use the general requirements as a guideline and also consider the following
If there are two shareholders, both are on the board of directors and one person is designated as the secretary of the corporation. Use the general requirements as a guideline and also consider the following information.
Three or More Shareholders
When there are more than two shareholders, there is greater potential for disagreements. Steps should be taken to ensure that corporate formalities are adhered to so that one individual cannot later contend a meeting (and any decision made at that meeting) was not valid due to inadequate notice or non-attendance. Use the general requirements as a guideline and also consider the following information.
© 2014-2017 Accounting for Small Businesses, Inc. All rights reserved.
Rochester, NY's leader in providing affordable monthly accounting services to small businesses.
Site designed and maintained by Biznetix, Inc.