End-of-Year Resolution: Clean up your Corporate House
In order to maintain its limited liability shield, a corporation must adhere to corporate formalities. Aside from properly forming the corporation, issuing stock, appointing directors and officers, holding annual meetings of directors and shareholders, you are well advised to keep an organized and up-to-date corporate record book. (Look here for five reasons to keep your corporate minute book up-to-date.)
While you can purchase fancy corporate binders such as the one pictured here, it is not required and you can keep all documents in whatever binder you have at hand.
Make sure that your corporate record book contains:
- The corporation’s certificate of incorporation, including any amendments thereto;
- The statement of the incorporator;
- The corporation’s bylaws, including any amendments or restatements;
- The corporate minutes of all shareholders’ and directors’ meetings;
- The share transfer ledger (also known as stock register), including the names and addresses of all shareholders, the number and class of shares held by each and the dates when they became the owners of record thereof.
To update your corporation’s record book, you need to prepare corporate minutes documenting any required shareholder or board meetings (see Section 602(a) BCL), as well as approving important transactions by the corporation since the last time the book had been updated. Technically, it is preferable to prepare minutes before the corporation entered into an important transaction, but, let’s face it, nobody is perfect. As long as you ratify actions at some point, you should be fine.
Many companies authorize their attorneys to keep custody of the record book in order to be sure that the record book is maintained properly. However, if you think your time is less valuable than your lawyer’s time, do it yourself, for example with the help of this book: The Corporate Minutes Book: A Legal Guide to Taking Care of Corporate Business.