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The corporate veil is the barrier that separates the corporate
entity from those who own the corporation. This is what allows
the corporation to be its own legal entity capable of buying
property, suing, and being sued. If this veil is pierced, then
the separation between the corporate entity and the owners is
destroyed and the individual owners of a corporation can be held
responsible for all of the corporate liabilities. The last
thing any corporate shareholder wants is to be personally
responsible for the liabilities, losses, and debts of a corporation.
There are three main aspects associated with annual corporate
maintenance: annual meetings, keeping minutes, and filing annual reports. This article will address
each of these items of corporate document maintenance and why they
are crucial.
The first part of corporate maintenance is holding an annual
meeting. At the annual meeting things like company changes and
organizational issues for the year will be discussed. This is
also where the new directors will be chosen, as well as the new
officers. In a bit of an oversimplification, this is where the
shareholders will have the opportunity to hear what is going on with
the corporation and will have a chance to give feedback as to how
the corporation is being run and what direction it will be heading
for the next year. All states require corporations to hold
annual meetings and failing to do so can cause the corporate veil to
be pierced.
It is during the annual meeting that minutes come into play. This is no more than
taking notes of what is discussed and what decisions are made so
there is a record of what is going on with the corporation during
meetings. Additionally, if there are other meetings that are
conducted throughout the year, then records should be kept of these
as well. Minutes do not need to be kept for routine and
day-to-day decision making, but they should be kept for any meetings
where decisions are being made that require the approval of the
board of directors or the shareholders.
One final aspect of corporate maintenance is the annual report
that is filed with the secretary of state. Each state will differ
on exactly what they require. Most states will require similar
core elements to be included in the annual report such as:
name of the corporation, address of the registered agent and/or main business office,
names, titles, and business addresses of its principal officers, and
the names and business addresses of its directors. Other
things that may need to be included are the purpose of the
corporation, number of vacancies on the board (if any), or the date
of incorporation.
All of these things are needed in order to make sure that a
corporation remains in good standing with the state. Failure
to follow these requirements can needlessly expose shareholders and
corporate owners to the liabilities of the business. Having
someone to help guide a corporation through this annual process and
to help offer reminders to meet these requirements can take away
some added stress. MyCorporation can help make sure your
corporation stays in good standing. Call us today and ask what
we can do for you. |
