July 28, 2014 by Aaron Scott Young
It is imperative to have a documented paper trail that separates the owners from the company in order to maintain the liability protection your corporation provides. .
State law requires corporations to prepare Annual Minutes of the Shareholders. Additionally, Board of Directors Minutes are necessary to document actions taken on behalf of the corporation throughout the year and serve as a track record to document what business has transpired and to confirm the approval of the officers and directors decisions.
Although some state laws do not require LLCs to have minutes, it is recommended to document the actions approved by the members and/or managers. Also, it is common in an LLC for the Operating Agreement to indicate a requirement to prepare Minutes.
Minutes include important items such as:
Without current and complete Minutes, the shareholders, officers and/or directors could be held personally liable for the actions of the corporation. Even worse, the legal protection could be in jeopardy if a creditor successfully pierces the corporate veil due to the corporation’s failure to keep complete Minutes.
A corporation may be disregarded if it does not maintain a separate identity from its shareholders through corporate formalities. In fact, there are over 80 reasons the courts can disregard the legal protection of a corporation.