Minutes: A Simple Way to Help Keep Your Company Legal

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4-7-1I think that many people get confused where Minutes are concerned, and make them more complicated than they really are. Minutes are nothing more than a written record of decisions made during a meeting. They can be a word-for-word transcription of the events of a meeting, or they can be a series of highlights, noting the major items discussed at a meeting, the actions that were decided, and the final decisions that were made. Can you have a meeting without Minutes? Yes. But why would you want to? Minutes are the written proof of that meeting. They tell you what was discussed, what was agreed to, and when.

In a corporation, meetings are conducted most frequently by the Directors. Those are the ones responsible for running the company. Directors meet to talk about business deals, people coming and going, someone wanting to buy stock, or sell their shares, and so on. In some states, but not all, these meetings are required by law.

Corporations are also required to have a meeting of the owners, or shareholders, at least once each year. We call that the annual meeting. The primary function of the annual meeting is for the shareholders to approve the actions that the Directors and upper management have taken in the previous year. It’s also where the Shareholders vote for the Directors. The annual shareholder meeting is a legal requirement.

Other than that, Shareholders don’t need to meet all that often, unless the company is doing something pretty major. Remember, shareholders are passive in a corporation. Most of the day-to-day business decisions are managed by the Directors.

4-7-2It’s easy when you’re a small company, or even a single-owner company to ignore the formalities. But if you do, you are potentially damaging your corporate shield. That’s the liability barrier that keeps the company protected legally from you, and vice-versa. The more things that you forget, or don’t bother doing, the more arguments a creditor has that you and your company are the same thing, and you should be personally responsible for company debts and other liabilities.

What About LLCs?

LLCs have more leeway than corporations where Meetings and Minutes are concerned. I don’t know of any states that legally oblige LLCs to have Members meetings once a year, the way corporation shareholders must meet. But don’t let that stop you. As soon as you’ve got a company of 2 or more, communication becomes key. Meetings allow everyone to connect and stay on the same page as far as the business operations go. The more disconnected shareholders and members feel from the business operations, the more troubles you can have. No-one likes to feel that they have no control, especially over something they’ve sunk money into.

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