Corporate Minutes for Single Shareholder
Corporate minutes for single shareholder are the written record of all decisions or actions that are taken during a meeting of a corporation's shareholders.3 min read
2. Corporate Minutes for Single Shareholder
3. Sole Shareholder: Why Bother With Corporate Meetings and Minutes?
4. How to Conduct Board Meetings for Sole Shareholders of S Corporations
5. Party of One: Setting Up Your Single-Person Corporation
Corporate minutes for single shareholder are the written record of all decisions or actions that are taken during a meeting of a corporation's shareholders.
Minutes of Shareholder's Meeting
Notes from shareholder's meetings should be recorded in the corporate minute book, a record of all notes from every past meeting. This should include notes about all appointments of officers, resolutions, and other actions taken by the shareholders.
'Shareholder' refers to an organization or person who owns shares in a corporation. Each shareholder's voting strength at meetings is determined by the number of shares that he or she holds, as long as the type of share is accompanied by voting rights.
If a company wants to attract investors without diluting the controlling interest in the corporation, they can issue a second class of shares that are not accompanied by voting rights.
Regardless of the class of their share(s), all shareholders have invested in the company. This means that they are able to see the share price rise if the company profits and to earn dividends. However, they may also lose their investment if the company ends up failing.
Shareholders are likely to see little return on investment if they invest in a company that goes bankrupt. This is because liquidators always pay equity holders only after they have paid secured creditors and unsecured creditors.
Shareholder meetings are required by regulations under each state's Business Corporation Act. These meetings are often used to deal with various administrative functions.
Shareholder meeting agenda can deal with a variety of issues, including:
- Executive compensation
- Business objectives
- Election of members of the board of directors
- Approval of an accounting firm to review company finances
Corporate Minutes for Single Shareholder
Resolutions, or decisions made at the meeting about the agenda items, must be included in the meeting minutes. Resolutions may include:
- Actions agreed to or taken at the meeting
- Outcomes of votes on proposals
- Outcomes of motions
Shareholders also discuss the location and time of the next meeting. The meeting minutes must also be signed by the chairperson or secretary.
Sole Shareholder: Why Bother With Corporate Meetings and Minutes?
Formalities like holding shareholder meetings and recording minutes help ensure the corporation continues to provide protection against personal liability.
As a sole shareholder, there are actions you must take to comply with federal and state regulations:
- Hold an annual shareholders meeting
- Hold regular directors meetings
- Hold special meetings of directors and shareholders if necessary
- Record corporate minutes
- Comply with your bylaws
- Act in the corporation's best interests
- Use your corporate title
- Maintain appropriate financial records
- File a Statement of Information annually
- Pay all corporate taxes
Failure to follow regulations and maintain proper records could result in the corporation's suspension or open you up to personal liability for the company's debts.
How to Conduct Board Meetings for Sole Shareholders of S Corporations
- Call a meeting of the board: Boards must meet federal and state minimum requirements by meeting at least once annually.
- Write an agenda: As the sole shareholder, you must still make decisions at the corporate level. Actions such as dividend declarations or entry into new loans require official approval from the board.
- Hold board meetings: Make sure to follow the agenda.
- Take notes: You will need your notes to write the official minutes.
- Prepare meeting minutes: You are required by state law to take meeting minutes. Minutes should include the location, attendees, start and end times, and all items discussed. Record all decisions taken and resolutions that are approved.
Party of One: Setting Up Your Single-Person Corporation
- Identify the basic structure: In a single shareholder corporation, the same person occupies the positions of shareholder, board member, and officer.
- Appoint a board of directors: Prepare meeting minutes that demonstrate that you have elected yourself as a director.
- File articles of incorporation: You may prepare, sign, and file documentation with your state on your own or engage a lawyer online or legal service to assist you.
- Record the votes of board meetings: Even if you are the sole director, you must prepare meeting minutes that reflect that as director, you elected yourself to the three officer positions of CEO, CFO/treasurer, and secretary.
- Decide whether to elect S Corporation tax status: You may be eligible for this tax status, which allows the corporation's tax attributes to be passed to the owner's individual tax return.
- Consider forming an LLC: Limited Liability Companies, or LLCs, help to minimize personal liability, with fewer regulative formalities.
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