Maintaining Corporate Records
Maintaining Corporate Records.
Once a corporation is formed, you need to maintain corporate records, regarding the following documents:
Bylaws
Corporate minutes
Statements of information
A stock ledger
Financial statements
These documents are mandatory to lawfully run a corporation in California.
The state informs that these businesses hold annual shareholder meetings, regular board of director’s meetings as well as meetings of any existing committees of the board. Furthermore, minutes must be taken for these meetings.
Minutes of the annual shareholder meeting must be created every year. Additionally, these minutes should be updated when certain major corporate actions occur:
Opening a new bank accountGiving a salary increase to a key employee or an officer.
Signing a new lease agreementIn frequent cases, small business owners avoid these corporate formalities for one reason or another. Usually, they feel that they lack the time to do so. Or they assume that because they own a small, closely-held corporation, they don’t really need to keep corporate records. But greedy litigators in a lawsuit will look for any evidence of failure to maintain corporate records. If they do so, you may be pointed to the direction of the alter ego theory. Your corporation will then be invalidated, leaving your personal assets vulnerable.
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