Corporate Minutes California: Everything You Need to Know
Corporate minutes California are important records that all California corporations must keep as it help to establish the business decision-making process.3 min read
Corporate minutes California are important records that all California corporations must keep. These records help to establish the decision-making process of the business and shed light on essential business processes.
Minutes and Unanimous Written Consent
When the shareholders and directors of a corporation hold meetings, the company is required by law to prepare one of the following:
- Minutes of the meeting.
- Actions by Unanimous Written Consent.
However, directors or shareholders must sign the minutes (consents). Corporate minutes and consents help to prove that the corporation carries out proper deliberations and that every stakeholder takes part in the decision-making process of the corporation.
The minutes or consents of meetings must list out the actions considered, the resolution passed, and the vote of each director or shareholder regarding each decision. Shareholders must sign the minutes of shareholder meetings, while directors sign the minutes for board of directors meetings. The minutes and copies of the notices of the meeting (or Waiver of Notice) sent to attendees of the meeting are kept in the corporate minute book.
Importance of the Language of Your Corporation's Minutes or Unanimous Written Consents
While corporate minutes are confidential, a court can subpoena the records, and the IRS can request for copies of your corporate minute book during an audit. It is vital for the wording of your minutes to provide enough information to protect you without giving out too many details that could hurt your interests in the event of lawsuits or an IRS audit. Be careful with the wording in your annual and special minutes, especially if you plan to draft it yourself.
A California corporation also needs to maintain a corporate minute book to keep originals or copies of all the signed and approved minutes or Actions by Unanimous Consent from any special or annual meetings of the corporation's shareholders and directors. The corporate minute book should be kept in a real book or binder, but it can also be something more formal. The minute book should also have copies of all submissions to government agencies, corporate contracts, and promissory notes.
What Are Corporate Minutes?
Corporate minutes are used to record actual happenings during directors' or shareholders' meetings, such as decisions on tax, legal, and financial matters and as well as votes taken at the meetings.
Corporate minutes provide several benefits for a corporation. They help to reduce the risk of future disputes and provide a reliable record of meeting resolutions in the event that the corporation needs concrete evidence to support a decision or action.
What Is Documented in the Annual Minutes?
Annual minutes consists of a record of critical business decisions that stakeholders of the corporation made at the annual meetings. Annual minutes should also list the date and location of the meeting, attendees from the company, as well as a summary of the corporation's actions during the last fiscal year.
The following are some of the basic requirements of corporations:
- State law requires all corporations to hold valid corporate meetings and keep corporate minutes of those meetings.
- Corporations are required to hold meetings only once a year, especially if the corporation is small.
If you are the only shareholder in your S corporation, your annual minutes can be as simple as recording the date for the meeting and stating that the meeting took place between the board of directors and shareholder.
While it is not required, you can state your annual profit and loss statement in the annual minutes. Also, record any important changes to the business throughout the year. If your corporate bylaws and articles of incorporation provide for electing officers each year, then elect officers. After that, sign the minutes as the corporation's secretary.