Businesses that have incorporated as a corporation or formed a limited liability company (LLC) must carefully document their compliance activities. For example, when a corporation holds its annual general meeting (a.k.a, annual shareholder meeting), it must keep a record on file for regulatory compliance purposes.
Most states require that C Corporations (including those that have elected for S Corporation tax treatment) hold a general meeting for their shareholders every year. Usually, they are also required to hold at least one meeting with their board of directors yearly.
Businesses structured as an LLC may need to hold an annual meeting with their owners (LLC members) every year. Even though states don’t require LLCs to hold an annual meeting, an LLC must do so if its LLC Operating Agreement requires it. If an LLC has elected S Corp tax status, its annual meeting obligation stays the same as its underlying business structure. In other words, if the state nor the LLC Operating agreement require an annual member meeting, the LLC with S Corp election does not have to hold an annual meeting.
Proper meeting minutes are essential for keeping an LLC or corporation in good standing and maintaining the personal liability shield they provide to business owners. Before year-end, companies must file their annual meeting minutes with their other entity records.
What Are Annual Meetings?
Generally speaking, annual meetings are a formal discussion of a company’s goals, strategy, financial situation, proposed changes to governance documents, or other pending decisions that require a vote by or approval of the business’s owners. Whether a company must hold an annual meeting varies by state and entity type.
Meeting minutes keep an official account of what was talked about and resolutions (decisions and actions) made at formal meetings. As I mentioned earlier, well-written meeting minutes are critical for demonstrating corporate compliance and maintaining its owners’ personal liability shield (known as the corporate veil).
Some states also require new corporations and LLCs to hold an initial meeting shortly after their formation and record minutes of that meeting.
Typically, meeting minutes are recorded by the corporation’s secretary (or another individual appointed at the meeting). One of the best ways to ensure that minutes from meetings are well-organized, thorough, and structured consistently from one meeting to the next is to use an annual meeting minutes template, which is something CorpNet can help you with. Approved meeting minutes should be kept with other vital LLC or corporate records.
Meeting Minutes for Corporations
The directors are the corporation’s decision-makers, so as a shareholder, this is an important duty. The directors elect the officers who run the day to day operations of the corporation. Any big decisions of a corporation are run by its directors, so shareholders’ votes are critical. The directors of a corporation’s board of directors typically are elected to serve on the board for one year or until another meeting of shareholders is held to vote for new directors.
Alternative names for the annual meeting include annual shareholder meeting, annual stockholder meeting, and annual general meeting (or AGM, for short). Most corporations hold their annual meeting soon after the company’s fiscal year has ended, at a time and location set forth in the corporate bylaws. Bylaws also usually establish how notice of annual meetings will be given, the order of business that should be followed, and the quorum (minimum number of shareholders present) to hold a vote at meetings.
At an annual meeting, information is communicated, and various activities take place. For example, annual meeting agenda items might include:
- Sharing the status of the organization (usually the company CEO or president will do this)
- Appointing members to the board of directors
- Voting on initiatives and transactions that require shareholder approval
- Reviewing financial information
- Allowing shareholders to ask questions about the direction of the business
Shareholder Meeting Minutes
Corporate annual meeting minutes serve as the official record of a business’s annual meeting. Most states—except for Delaware, Kansas, Nevada, North Dakota, and Oklahoma—require corporations to keep meeting minutes. During an annual meeting, the company’s corporate secretary takes detailed notes to capture everything discussed and decided upon during the meeting. Meeting minutes do not need to include every little detail, but they should document the key information and any decisions made or actions taken. In general, minutes should be detailed enough to serve as the corporation’s institutional memory.
Examples of the information that might appear in a corporation’s annual meeting minutes include:
- Date, time, and location of the meeting
- Who attended and who was absent from the meeting
- Who recorded the minutes (usually, the person serving as the corporate secretary)
- Meeting agenda items with a brief description of each
- Details about what was discussed during the meeting
- Results of any voting actions taken
- The time when the meeting adjourned
After annual meeting minutes have been approved (per the company’s bylaws), the corporation should keep the original executed copy in a safe place along with its articles of incorporation, amendments, bylaws, and other corporate records.
Sometimes corporations also hold special shareholders’ meetings in addition to their regular annual meeting. These happen if the board of directors is proposing significant actions, such as mergers, entity conversions, or other notable changes.
Even if you are a small business and a sole director or owner, it’s a good idea to even take just an hour or two at a coffee house and go over these items like a larger corporation would do. The same fundamentals of goals, sales, money, and all big picture items are important to a corporation regardless of size.
Corporation Board of Directors Meeting Minutes
Most states require that corporations hold a board of directors meetings (generally, at least once per year) to go over the past year’s details and decide on actions and strategy for the coming year.
Below are examples of issues that directors might discuss:
- Officers of the corporation
- The salaries of the officers
- The corporation’s net and gross profit
- Issuance or selling of stock, including the amount of dividend per share the corporation will issue
- Decisions about opening new lines of credit in the business name
- Legal and tax issues
Like annual meeting minutes, a board of directors meeting minutes should capture who was present at the meeting, what was discussed, and any actions and decisions made. The meeting minutes should be included in the corporate record book.
Meeting Minutes for LLCs
Generally, states don’t require Limited Liability Companies to hold annual member meetings and write minutes. However, if the LLC’s operating agreement states that members must hold annual meetings and record minutes, they must follow through on that provision to demonstrate their adherence to business compliance. Having an annual meeting and keeping a record of what was discussed helps validate that business owners are treating the limited liability company as a separate legal entity. That measure reinforces the corporate veil that protects LLC members’ personal assets from the company’s legal and financial liabilities.
Examples of what LLC members might discuss during their annual meeting include the introduction of new members, departure of existing members, proposed ownership distribution changes, the LLC’s financial performance during the past year, and the company’s goals for the year ahead.
Information captured in an LLC’s annual meeting minutes usually includes:
- The meeting’s date, time, and location
- Who wrote the minutes
- The names of the members in attendance
- Brief description of the meeting agenda
- Details about what the members discussed
- Decisions made or voting actions taken
- The time that the meeting adjourned
All persons who attended the meeting should have an opportunity to review and amend the minutes before making them an official part of the LLC’s records.
What Should You Do With the Minutes After They’re Recorded?
Experts advise that, like other business documents, minutes should be kept on hand for at least seven years. Ideally, they should be made a part of the business’s permanent records. Members of the LLC or corporation (including shareholders, officers, and directors) are entitled to review the meeting minutes upon reasonable request to the company.
While business owners do not have to file meeting minutes with the state, they should still be considered important documents and are essential for protecting the LLC or corporation’s good standing and limited liability status.
How CorpNet Can Help
CorpNet can draft and prepare your annual meeting minutes to help you stay in compliance. This can be done immediately after your annual meeting, or if you’ve failed to create meeting minutes for years, CorpNet can also help you create multiple years of annual meeting documentation if you are behind with your annual meeting minutes for prior years. Upon completion, your meeting minutes will be emailed to you for your records and will also be uploaded and stored in CorpNet’s secure Compliance Portal so you can access them anytime and from anywhere.