Corporate Record Keeping – Company Records Explained
Filing a certificate of incorporation in New York is the beginning point of a corporation (or articles of incorporation in Delaware). Unfortunately, this is where it often ends for many small business owners. Too many neglect the additional paperwork that is needed to keep the corporate house in order and keep the corporate shield of limited liability intact. I have written about corporate books before (as I had almost forgotten), but this is a new take on it and a much needed update, since I suspect there are still many small business companies out there that have nothing of this set up properly. If you don’t want to learn how to do it, have a business lawyer explain it to you, or better, make a business lawyer keep your records as a secretary of the corporation. The lawyer or his or her assistant can do this very quickly and efficiently.
While no fancy leather bound binder and seal is required, one should have some sort of binder with the following tabs and papers:
Under this tab, in New York, one files the certificate of incorporation, in Delaware, the Articles of Incorporation, usually a certified copy of the one registered with the Department of State, Division of Corporations. This is a public document and anybody can order a copy to look at it. Along with with the certificate of incorporation, you should file the filing receipt, which you received from the Division of Corporations right after filing the certificate or the articles.
Each corporation must have by-laws, which are the rules that govern the inner workings of the corporation; how many officers/directors are allowed, how are they elected/removed; how are meetings of shareholders to be conducted…and so forth. The by-laws of a corporation are not public, but they must be in your corporate binder. If, against my advice, you used a non attorney formation service, they may have sent you a set of standard by-laws, which may or may not be all you need.
The tab called minutes should contain all records relating to shareholder meetings or consents and director meetings or consents. At a minimum, at the start of the corporation, it should have papers documenting the “organizational meeting.” This is where the “incorporator”, the person who signed the certificate of incorporation and filed it in Albany does certain things: Adopts By-laws of the corporation and appoints the first director(s) of the corporation. This “meeting” can be done in writing and be a one page document signed by the incorporator, See example here.
Then there should be minutes of the first meeting of the directors, where the directors approve the actions of the incorporator, decide to open a bank account, authorize the issuance of shares…and so forth. See this example.
As the corporation lives on, this tab will also hold all annual shareholder and director meeting minutes and any other meetings where the corporation made certain decisions through its directors and shareholders.
In most cases, if you don’t have a stock certificate showing your name on it, you don’t any piece of the corporation. No matter what anybody told you how much of the company you own, you must have a share certificate showing it. If you are the sole owner of the company, you can put your stock certificate here. This tab will also hold blank certificates that can be issued to new shareholders at a later time.
A Stock Ledger is a register that tracks any issuance of stock, by listing the number of shares issued, date of issuance or transfer, the name and address of the shareholders and so forth.
**This post is for informational purposes only, For legal advice contact a business lawyer**