What are Corporate Records and Why Should I Care? Corporations are required by law to document and keep records of their activities. At its most basic, this includes recording the minutes of the mandatory annual meeting of the directors where the company’s financials are approved, dividends to shareholders are declared and officers (those appointed by the board of directors to manage the day-to-day operations of the company) are appointed. These records also include keeping the minutes of the required annual shareholders’ meetings where the company’s financials are reviewed and the shareholders elected directors to manage the company for the upcoming year. There are also certain actions that require a vote of the shareholders in order to be valid (i.e. a change to the shares of the corporation or a change to the name of the company). These actions need to be documented in order to confirm that the changes were valid. The best approach to corporate record-keeping is to document significant decisions that are made by the directors and, when necessary, document the approval of these decisions by the shareholders.
In law, a corporation has the legal status of a person. This means it can enter contracts, buy and sell assets, sue and be sued. This is all, of course, complete fiction because a corporation is not a person. Think about it – you can’t take a corporation out on a date and you’re not going to spend time worrying about a funeral for a corporation when it is dissolved. However, this is precisely the reason why corporate records matter – the records are what bring LIFE to the corporation! Without corporate records, the corporation isn’t believable. If there is nothing to demonstrate that the corporation is alive and actively doing things, it becomes too much of a fiction and will be perceived as not being “real.” And if it isn’t real, how can it interact with any of our legal or financial systems with any sort of credibility? It can’t. It is just a shadow of a thing. Corporate records are the only thing that demonstrates to the rest of the world that the corporation is alive and ready to engage with the world.
This is why corporate records matter, and this is why a business owner needs to care about them. If you want your corporation to be able to get out there and function in the world, you need to take seriously your responsibility to document what it is doing. Without corporate records, your corporation might just as well be an imaginary friend – interesting to you, but invisible to everyone else.
Does your business need some help in this area? Contact Brown Lawyers to discuss your company’s corporate record keeping requirements. We’ll show you how to bring your corporation to life!