by Matt Smith, Law Clerk and Salene Mazur Kraemer
You are a business owner.
You are a shareholder in a business.
You never have shareholder or director meetings.
If you ever want to sell your business, you need proof of what happened in the past. Memorializing the ongoings of your business with corporate minutes and resolutions and corporate meeting is very important. A corporate minutebook is essentially a diary of the significant business events that have transpired.
Business owners like me are often so mired in everyday affairs of the business that he or she cannot take the time to meet with other members. We are juggling all the balls in the air, afraid that some may drop. Also, sometimes, we see the “curve but not the road ahead”.
You should know that a future investor or purchaser or lender will demand copies of your corporate minutes or resolutions. Moreover, not only will the minutes provide important documentation of the corporate business, but may serve as tangible evidence of the proceedings in case of dispute later. Perhaps, if an action required shareholder approval, and such approval was never documented, disgruntled shareholders could later challenge that action, giving rise to a “he said, she said situation”. Avoid this and start consciously conducting formal meetings and drafting minutes of such meetings. Often, your business lawyer is present and drafts any necessary resolutions (hint hint: that’s us). Allow us to provide some general info on corporate minutes, meetings, and resolutions.
A legal entity, such as an LLC or other corporation, is formed to help shield a businessperson from individual liability arising from doing business. This legal protection, however, can be pierced if a businessperson does not follow certain formalities (i.e., commingling funds, etc.). One of the most fundamental of these formalities is the corporate meeting.
FOLLOW YOUR OPERATING AGREEMENTS. The articles of incorporation or operating agreement for a company may mandate annual or quarterly meetings. The articles or operating agreement may also provide for instances in which a “special meeting” is required to approve certain actions, such as: obtaining a loan, issuing equity, and/or replacing a director or officer, etc. The approval or rejection of such actions should be recorded in the “corporate minutes” and separately evidenced by a “corporate resolution.” If an operating agreement so provides, some actions can be approved or rejected without any meeting at all and by written consent. All corporate minutes and corporate resolutions should be safely placed in a special corporate binder.
WHAT TO BRING: Regardless of the meeting type, it is best to insure that certain documents are always available. Insure that a hard copy of the following items are present:
• Articles of Incorporation and any amendments;
• the operating agreement;
• any Corporate Bylaws;
• the minutes of all previous meetings;
• a print out of current information held on file by the state agency with which the corporation is incorporated;
• most recent financial statements
By having a hard copy of these items, it will provide any and all members an opportunity to review those items and to suggest amendments. Member can also be certain that they are obtaining the requisite number of votes for a specific action.
CORPORATE MINUTES. Corporate minutes must not only document the date, time, and location of the meeting, but should also indicate all parties present. The minutes will also provide a record of the topics discussed. The minutes should be signed at the adjournment by all shareholders or members present.
SUGGESTED TOPICS CHECKLIST: At a quarterly or annual meeting, the members should at the least discuss:
• approval of last meeting’s minutes;
• the financial health of the business, possibility of distributions.
• growth plans for the business;
• the sale of any significant assets;
• changes that should be made to the directors or officers of the company;
• material change in the purposes or nature of the Company’s business;
• merger of the Company with another entity;
• sale or lease of any real estate;
• decision to incur certain level of debt;
• contracts, leases, expenses, or other agreements involving more than a certain dollar amount;
• change in tax status or elections of the Company;
• change in the registration or form of the Company;
• acts to dissolve the Company, make an assignment for the benefit of the Company’s creditors, appointment of an examiner or receiver or to file a voluntary petition for Chapter 11 Bankruptcy for the Company;
• significant tax or other debt delinquencies (with secured or unsecured creditors)
• loss of major clients;
• significant outstanding accounts receivables;
• removal or addition of an officer or member of the board of directors; and
• any other operational, human resource, financial, marketing, sales issues that need immediate attention.
The financial statements should show not only the balance sheet of the company, but also the current capital account balance for each shareholder or member. This information is essential not only for discussing the health and future of the business, but in determining whether and in what amount a distribution to a shareholder may be permitted.
To insure that you and your business are maintaining the essential corporate formalities, speak with an attorney to review the corporate records. If you need to recreate minutes from the last few years, contact your business attorney to do so.
In celebration of my 5-year anniversary as a business owner, we are updating the firm brand and revising the website. For my graphic designer, I wanted to boil down my philosophy about life, what drives me and my firm, my value set, mission statement into a laundry list of buzzwords. I want the site and logo and photos to reflect this value set. I thought I would share with you my process.
- Community, connected, connectivity, group, synergy sharing, network, collaborative, includer, social, wide foot print, attraction, retention, followers, following, resolve
- Entrepreneurial, outside the box, hear the beat of a different drum, assist serial entrepreneur clients in next venture, leadership, innovation, change, revolutionary
- Technology, cutting edge, reengineer, SOCIAL MEDIA, breakthrough, creative, change
- Education, information, knowledge, learner, communicator, consultant, confidante, legal and business scholars, advisor, mentorship
- Business, boutique, niche, money, corporate, number crunchers, financial acumen
- Power, competition, winning, pushing, being the best you can be, aggressive, firm, achiever, grinders, book worms, research mongers, orators, top notch legal skills
- Simple, efficient, bottom line, bang for your buck, authentic, work/life balance, talk in plain English, responsive, accessible, clear, custom, self-made, work ethic
- Bankruptcy, Turnaround, restructuring, creating simplicity from chaos/clutter, finding opportunity from difficulty, fresh start, assess risk, protect, defend, prevent
- Positivity, growth, profitability, making livings, supporting families, revitalizing communities, change
- Vibrance, life, joy, passion, service to others, service to community, family, children, fun
TAGLINE: OUR BUSINESS IS HELPING YOU WITH YOURS
I am also updating the color scheme. Right now the colors are teal and dark grey and white. I wanted to add in a third color: chartreuse, yellow, orange, lilac. I found these color combos on Pinterest (a site I use very infrequently). See board here. We don’t want to do too much violence to the logo and colors as they now stand. But I think I am going to go with several colors. I like the use of shadows, shading, shades of color, reflection.
LOGO itself: The first logo is the M and K letter melded in to one. Like a business chart, showing growth. I wanted hard, contemporary, lines. This time around I think I want circles. I will keep you posted on what evolves.
The well-known pizza chain Sbarro LLC, and its numerous related entities (“debtors,” collectively), filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York on March 10, 2014. A motion filed by debtors for joint administration of the cases was granted on March 12, and the case has been assigned to the Honorable Martin Glenn.
Both assets and liabilities in the case are listed to be between $100 million and $500 million. Between 1,000 and 5,000 creditors are estimated to exist, with various lease obligations constituting the bulk of debtors’ unsecured debt. However, Vistar Corporation, a trade creditor, holds the largest unsecured claim at approximately $540,000.
According to debtors’ pre-packaged reorganization plan, debtors propose to classify claims in the following manner: (1) Other Priority Claims; (2) Other Secured Claims; (3) Prepetition Secured Lender Claims; (4) General Unsecured Claims; (5) Intercompany Claims; (6) Equity Interests in Sbarro Holdings, Inc.; and (7) Intercompany Interests. The pre-packaged plan stipulates that classes (1), (2), and (7) will be “unimpaired.” Impaired creditors are those whose legal rights against the company are being changed by the reorganization plan. Usually, this means the plan calls for paying them less, and usually far less, than what they’re owed. Unimpaired creditors are those whose legal rights against the company aren’t changed by the plan
This is not the first time the debtors have turned to bankruptcy for relief. In April 2011, the rocketing prices of raw materials and declines in mall traffic (where many of debtors’ stores are located) forced debtors to file Chapter 11. Debtors’ emerged from bankruptcy having slashed debts from approximately $400 million to $130 million.
Most people bring a drivers license or passport and a social security card. Do not forget to bring these. The Chapter 7 Trustee will adjourn the hearing if you do not have proper ID. This will mean more lawyers fees for you and possibly having to ask for another day off of work. ORDER a duplicate SOCIAL SECURITY CARD if you have lost yours. A W-2 works too as long as it has your social security number on it. See entire list of acceptable id at this link.