Corporations in the United States are registered and set up under state law and must follow that state's requirements to remain in good standing. These requirements include maintaining shareholder registers, filing reports and conducting shareholder meetings. The Internal Revenue Service allows certain corporations to file an election under Subchapter S of the Internal Revenue Code to become an S corporation. This type of entity follows different tax regulations than other corporations, but the state requirements for shareholder meeting minutes are the same.
State Requirements
Each state has its own laws dictating how corporations must administer their books and records. Almost all states require that corporations hold regular shareholder meetings and that they retain copies of the minutes of those meetings. Minutes are simply a summary of what was discussed and the results of any shareholder votes. Some states also require minutes for senior management meetings. In all cases, the state does not require that the minutes be filed or sent in, only that they are maintained and available on the premises if requested. The IRS will often ask a corporation for copies of its minutes before an audit. The states that do not require maintenance of minutes are Delaware, Kansas, Nevada, North Dakota and Oklahoma. Even though these states do not require it, it is good management practice to keep records of all corporate meetings.
Content of Minutes
State requirements vary, but most states dictate that the meeting minutes should include the following: a list of who was invited to the meeting, who was present and absent, a summary of each agenda item discussed, a recording of the results of any voting and a record of any other matters that arose during the meeting. Board of directors and subcommittee meetings often include a vote on approval of the prior meeting's minutes, and that information should be included also.
Written Consent for Action Without Meeting
Most states allow corporations to engage in certain actions without having to hold a formal meeting if a specified percentage of shareholders agree to the action in writing. This is often only practical for smaller corporations with few shareholders, but it does allow a corporation more flexibility to act quickly if the need arises. The written consent of each shareholder must be filed with the corporate minutes in case the state asks to review it.
Failure to Comply
In a small corporation, it can be easy to let state requirements, such as keeping minutes, slide. There can be serious consequences, however, including the ability of the state to revoke corporate status. Not maintaining proper books and records can also lead to a loss of liability protection for shareholders, allowing their personal assets to be vulnerable to seizure to settle debts. If shareholders are sued personally, a court can review whether they followed state requirements for holding meetings and recording minutes.