It is vital that all corporations keep adequate documentation in the form of minutes of shareholder and director meetings. In many jurisdictions, the absence of proper records may be a liability for the shareholders of a corporation, particularly in cases where the shareholders are directors themselves, or where they have close relationships to the corporate directors.
Most jurisdictions require corporations to hold annual shareholder's meetings to elect directors. Also, the bylaws of most corporations also require their board of directors to have an annual meeting. Although the board may delegate day-to-day operation of the business, the following actions normally require approval by the board of directors:
- Electing officers of the corporation
- Adopting business policies and plans,
- Designating committees and allocating authority to them
- Issuing and selling stock
- Approving the sale, lease, conveyance, exchange, transfer, or other disposition of all or substantially all corporate property and assets
- Approving mergers and reorganizations
Approving the adoption of pension, profit-sharing, other employee benefit plans and stock-option plans
- Approving corporate borrowing and loans
- Entering into joint ventures.
The board generally should also approve the following types of transactions:
- Designating corporate bank accounts and authorized signatorie
- Changing an officer's compensation (unless this has been expressly delegated)
- Entering into a major lease of premises
- Entering into any other major contractual agreement or venture
This list does not include all requirements, and some corporate actions require shareholder approval as well. Also, some jurisdictions have different requirements.
Of course, small corporations in particular often have informal "meetings" where these matters are decided. However, it is important to subsequently prepare meeting minutes or unanimous written consents (signed by all the directors in lieu of a meeting) that approve the actions.
If your corporation has not kept adequate records of shareholder and board meetings, these records with can and should be reconstructed with the aid of a legal professional.
You should obtain proper legal consultation if you think that your corporate records might not be getting the attention they should be.