An entity is separate from the business owner, even if the entity has only one equity owner. Separating the business owner’s personal finances from business finances, for example, is paramount to building a successful business.
Likewise for corporate action, just because the owner wants to accomplish something through the entity, good corporate governance typically requires that proper authorization be shown for that action. Corporate governance, among other things, calls for showing that authorization through approval of written resolutions, whether by meetings or by consent, or by delegation of duties to various officers or individuals. This becomes even more important when partners and investors are involved in the business.
Proper conduct of your company’s affairs therefore requires minutes of meetings or consents of shareholders and directors – in a corporation – and of members and managers – in an LLC. That is the job of a Company Secretary.
Particularly in a group ownership setting, written minutes keep everyone on the same page – they track corporate decisions and record the situation at the time and the decisions actually made – rather than relying on memory several months or even years later. This minimizes second-guessing or even worse – accusations of misconduct.
This is important even for sole owners – showing that you keep your business affairs separate from your personal affairs. Any outside investor or lender will want to review these corporate records before deciding whether to underwrite your enterprise, as would a potential buyer of the business. And the IRS could want to see them during audits to help assure that the owner is keeping his personal and business lives separate.
We advise on a range of corporate governance issues, including
- proper matters for consideration before taking action through an entity
- relative rights of other interest holders in the entity
- the kinds of matters to cover at meetings or by consent and the timing and conduct of these meetings
We can prepare minutes and consents, as well as maintain a minute book of these important meetings.
And we can help you establish a process on how to do it for yourself.