Is an LLC Required to Have Annual Meetings?
Is an LLC required to have annual meetings? The answer to this depends somewhat on the state in which an LLC is registered.3 min read
Is an LLC required to have annual meetings? The answer to this depends somewhat on the state in which an LLC is registered. Generally, no, LLC's are not required to hold annual meetings; however, annual meetings are a great way to maintain a healthy and well-run business.
Are LLCs Required to Hold Annual Meetings?
There are certain rules and requirements for business entity types that provide them with liability protection. Corporations used to be the most popular entity type because they provided such protection for their members. As long as a corporation has kept up with its annual requirements with the state, they would remain in good standing. A corporation in good standing is one that has liability protection.
As limited liability companies (LLCs) came onto the scene throughout the past few decades, corporations became less popular for business startups. An LLC is not required to follow as many requirements as corporations are in order to maintain their liability protection. Overall, LLCs provide much of the same benefits of a corporation, but without as many state requirements.
What Are the Requirements for an LLC Annual Meeting?
LLCs are not legally required to hold annual meetings by the state in which they register, but many do. Frequently, the members and founders of an LLC will make annual meetings a requirement in their organization documents. These are documents that include the LLC's articles of organization and the operating agreement.
Articles of organization are filed with the state when a business owner wants to register their domestic or foreign LLC to do business in a certain state. Operating agreements are not filed with the state but are created by the founding members of the business and signed. These are the documents that govern LLCs. If your operating agreement requires you to hold annual meetings, not doing so could result in a loss of liability protection.
In the case that an LLC's operating agreement requires annual meetings, but the LLC is finding it too difficult to keep up with such meetings, they can amend the operating agreement. An LLC also has the option to create a unanimous written consent to forgo a meeting. This document will lay out the actions that the members hope to take with the business over the next year. Once all of the members sign the document, they can use that written consent as a meeting replacement.
How Can Not Holding Annual Meetings Hurt the LLC?
Liability protection for an LLC or corporation, or any other protected entity type, can be lost if the corporate veil is pierced. There are a few ways that this can happen. If a creditor finds a way to come after the personal assets of one or all of a business's owners for a wrong done by the business, they've successfully pierced the corporate veil.
The most common ways that a lawsuit against a business can pierce the veil of liability protection include:
- Fraud committed by one or more of the LLC's members.
- Mixing business and personal assets.
- Failing to uphold business requirements (this can include holding meetings).
Advantages of Required Annual Meetings
Annual meetings for any business are a great way to check in and make sure everyone is on the same page. They also provide great opportunities for officer elections, if you have those, and adding new members. Other important topics like choosing or hiring management and issuing dividends can also be discussed thoroughly.
Meeting minutes can be very helpful in defending your business if it is wrongly accused of a crime or misconduct. There may actually be minutes recorded from an annual meeting that could prove legal and responsible activity in the face of an accusation. If a member is accused of spending company money for personal gain, thorough details of business operation could keep an LLC's liability protection fully intact.
Legal Requirements for LLC Meeting Minutes
LLCs are not required to provide meeting minutes, just like they aren't required to hold annual meetings, but, again, it helps. Annual and semi-annual reports for LLCs are due in most states along with a fee. These reports include information like:
- LLC name.
- LLC address.
- LLC main place of business.
- LLC member information (names and addresses) and any changes.
- LLC registered agent information (name and address) if changed.
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