Piercing the corporate veil: Why your annual company minutes and waivers are IMPORTANT.
Updated: Mar 17
Annual meeting minutes are an important compliance requirement for corporations, as they help maintain the company's corporate veil. These minutes document the decisions made and actions taken during the annual meeting of the board of directors and shareholders, and are often required by state laws and regulations. Corporate annual meeting minutes are a formal document that records the discussions, decisions, and actions taken during a company's annual meeting. The minutes serve as an official record of the meeting. A corporation's annual meeting minutes typically include a summary of the meeting's proceedings, such as the date and location of the meeting, who was in attendance, any votes taken, and any important discussions or decisions made. They serve as a legal record of the meeting and should be kept on file for future reference. In the event the company is sued, Courts may consider commingling personal and business assets and involvement in fraudulent activities when deciding whether to pierce the corporate veil. Additionally, failing to fulfill company formalities, such as holding annual meetings and recording minutes, can also be a factor in the decision. The following are some general rules to sustain the corporate veil:
Maintain adequate corporate records and follow proper corporate formalities
Avoid commingling personal and corporate funds
Ensure that the corporation is adequately capitalized
Avoid fraudulent or illegal activities
Obtain and maintain proper insurance coverage
Respect the separate legal entity of the corporation
Conduct business in the name of the corporation, not as an individual
Hold regular corporate meetings and keep minutes of those meetings
Use proper contracts and agreements with third parties
Seek professional advice when necessary.
Meeting minutes are an important legal document that record the decisions and actions taken at a meeting. If a corporation fails to properly draft and maintain its meeting minutes, it could potentially risk losing its status as a separate legal entity or allow the corporate veil to be pierced during a lawsuit.
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