As the year comes to a close, it is a good time to start thinking about whether you have kept your corporate records updated over the past year. Were there any big decisions made by the company? Were these decisions formally documented in the corporate records?
The California Corporations Code requires annual meetings of shareholders for the election of directors. Further, most corporate bylaws call for annual meetings of the Board of Directors to transact business, including the appointment of officers. If your company is an LLC, although annual minutes are not required, it is always the best practice to have documentation to evidence major decisions that were made and transactions that were undertaken.
If you have not updated your minutes or reviewed your corporate records recently, we are available to help you perform this important task. We recommend that you regularly document your corporate activities, including but not limited to the documentation of the annual minutes of meetings of shareholders and directors.
If you have not updated your minutes or reviewed your corporate records recently, we are available to help you perform this important task.
Annual minutes are not the only consideration for running an orderly company. For example, do you have a shareholder’s agreement in place for your corporation? A shareholders’ agreement is an essential part of any corporation owned by more than one shareholder. A well-thought-out agreement provides an orderly way to transfer shares in the business and helps keep the business running smoothly in the face of future events such as death, disability or retirement of a shareholder. Here are some of the issues that are addressed by a shareholders’ agreement:
How are ownership buyouts to be handled?How are disputes to be resolved among shareholders?How are share sales handled (e.g. first right of refusal by current shareholders beforean outside investor can purchase them)?What are shareholders’ obligations and commitments?What happens when an employed shareholder is voluntarily or involuntarilyterminated? Are they required to sell their shares?What happens in the event of death/incapacity?How is a share valuation determined (e.g. to buy out an estate in the event of death)?Is life insurance required (e.g. funding for purchase of shares from estate)?
Even if these ideas are still in the planning stage, taking steps now to clarify how share price will be determined as well as other issues will provide all shareholders with peace of mind on these critical matters. We can be of assistance in advising you on the legalities, structuring and steps necessary to carry out these considerations. Make this the year you plan for your future.
Lanak & Hanna is here to assist you with all of
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