When was the last time you thought about your corporate minute book? If you are like most small to medium sized business operators, your minute book is not your top priority. Many companies only think about these records when they are asked to produce a copy because they are: (i) applying for a loan; (ii) selling their business; or (iii) being sued.
Although the maintenance required in keeping your corporate records up to date can be time consuming and often easy to overlook, it is a crucial part of engaging in quality business practices. Documenting events that require director or shareholder participation such as the issuance of stock, the purchase of real property or applying for a loan or line of credit is imperative in protecting your business. If uncertainties or questions regarding corporate activities arise, the paper trail your business has created will safeguard against any potential legal battles and prevent any unnecessary headaches.
The consequences of neglecting corporate formalities can be devastating. In the event that your company is being sued, failure to maintain thorough records of business activities can result in a piercing of the “corporate veil”, ultimately leaving you, the shareholders, directors and officers personally liable for the acts of the corporation. If the case were to entail company debt or taxation, you can imagine just how costly of a mistake that could be.
Inadequate minutes not only increase legal exposure, but they can also devalue the sales price of your business when trying to sell. Most credible buyers look for businesses that sustain an accurate and honest detailing of its transactions and affairs. After all, your minute book not only holds the history of your company, but the current integrity of it as well.
So, as a business owner or someone who works with business owners, you will want to ask yourself or your clients the following questions: what does your corporate minute book look like? Is your company protected the way it should be? If not, let our firm conduct a quick review to determine what your book requires in order to be compliant. To schedule an appointment, call 972-378-9111, or contact us by e-mail.
