If you run a corporation, there are rules by which owners must abide in order to remain in compliance with territorial and federal laws. A failure to do so could result in serious issues for the corporation and its owners, who could suddenly find themselves liable for the business’s debts. Thus, it’s important to keep thorough records of all official corporate decisions.
The process of making decisions within a corporation can actually be somewhat complicated, as it depends on the different roles played by different people within the organization. The key actors in a corporation are the shareholders, the board of directors, the officers and the employees. The board makes many of the important decisions, and it tends to have control over large swaths of the organization and its business transactions.
It’s also important to note that the size of the corporation can make a difference in how the different roles are enacted. In larger corporations, different individuals generally occupy the various roles, but in small closely-held corporations, it’s fairly common for multiple roles to be occupied by the same people, which means there are not as many individuals involved in decision-making processes.
Although a good rule of thumb is to keep written records of all decisions made by actors at any level of the corporation, documenting formal decisions that the shareholders or board of directors make is crucial. Typically, these records are kept in the form of meeting minutes or consent resolutions, both of which help protect the status of your corporation and provide evidence that the corporation is making decisions in a thoughtful and deliberate manner. Some of the situations in which written documentation should be kept include annual meetings, stock issuances, property purchases, loan or credit approval and tax-related decisions.
In most corporations, a secretary or other officer will be charged with keeping written minutes during meetings, but other members of the corporation may also be responsible for keeping records and holding onto documentation. It is in the best interest of the corporation itself, its owners and others within it, and it’s also just good business policy. The principals at the corporation shall also ensure that board and shareholders meetings are regularly held, with proper notice given, in accordance with the corporations bylaws.
Keeping records of your corporation’s decisions is only one aspect of your company’s recordkeeping. Others, of course, include keeping accurate and thorough financial records and personnel records. In general, your corporation will benefit from responsible and consistent recordkeeping, and having systems in place that foster a culture of documentation can play a major role in keeping your corporation in compliance.
BoltNagi is a widely respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.