Services & Fees

office (206) 682-9200
fax (206) 292-9272
toll-free (800) 579-5233

Email: brad.kirschner@hkpseattle.com

Corporate Minutes

One piece of advice that I have for my corporation and LLC clients is to hold and document annual board and shareholder/member meetings. 

Why is it important to hold and document these meetings?  First, as a corporation, absence of such meetings and documentation can put the shareholder protection afforded by corporations in jeopardy.  Secondly, shareholder/member and board minutes are often an important source of support for corporate actions if questioned by tax authorities.

What should you document as part of your board and shareholder minutes?  While there is no set rule for what should be documented, there are some basic items that I have compiled in the attached list.  Board and corporate minutes should be documented and retained as evidence of corporate actions.  Whether management or legal counsel maintain the minute books, it is important that the minutes be signed by the appropriate officers and directors.  You should also consider documenting any past board and shareholder meetings that you have held, but have not yet completed minutes.

1.      General items to be included in minutes.

a.      Quorum present or waver of quorum.

b.      Acceptance of prior meeting’s minutes.

c.      Election of officers or appointment of mangers (LLC).

d.      Officer/Manager review of results for the year.

e.      Ratification of significant officer actions for the prior year.

2.Specific items to be included in the minutes

a.      Approval and accrual of officers’/managers’ bonuses for the year.

b.      Listing of officer salaries for next year (along with justification if they are likely to be challenged as excessive or conversely, not substantial).

c.      Determination of profit-sharing contribution.

d.      Establishment of fringe benefit plans.

e.      Reasons for accumulations of earnings.

f.        Approval of loans to employees (and terms of such loans).

g.      Approval of loans to or from shareholders (and terms of such loans).

3. If the corporation/LLC is subject to a buy-sell agreement, documentation of the entity’s valuation, if required to be updated.

4. Documentation of capital structure transactions covered in the minutes.

a.      Approval of issuances of new stock or membership.

b.      Redemptions of any stock or membership

c.      Approval of stock or membership interests bonuses.  (Recipients should consider if Section 83(b) election is appropriate.)

d.      Approval of any Sale, liquidation, or reorganization of the entity or any of its subsidiaries, divisions, partnerships or joint ventures.

e.      Any Section 351 asset transfers.

5.Discussion of Subchapter S corporation status and actions if any regarding the election/termination thereof.