Idaho Business Law Corporate Minutes - Why You Must Keep Them
By Lane V. Erickson, Idaho Business Lawyer
You have a fantastically awesome idea and you have friends who share your vision and who are willing to be your partners to turn your idea into a profitable business. You took the right step of finding a good business law attorney who helped you incorporate your business and get it properly set up. All your corporate documents are in place, you have your bank accounts in place, you have investors who have provided seed money for your business, and you are now ready to move forward in turning your business into the next Apple, or Google or Amazon. Essentially, for your business it appears that the sun is shining, the sky is blue, the birds are singing, and everything seems to be perfect.
The question is, is there anything more you need to do with your corporate records to make sure that everything continues moving forward on this yellow-brick path to success. The answer is yes! You still need to keep all your corporate records updated, which includes keeping accurate and updated corporate minutes.
At the Racine law office our team of Idaho business attorneys understand the importance of keeping updated records for your business such as corporate minutes. We have helped clients understand and meet corporate record keeping legal requirements, including corporate minutes, for more than 70 years. Our team includes partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley. Our attorneys have decades of experience, knowledge, and skill in helping business clients deal with all of their business needs.
The purpose of this article is to describe what corporate minutes are, why they are required by Idaho law, and how they can help keep your shareholders and owners informed of the decisions and operations of the business. We will also discuss how your corporate minutes may be necessary for the ongoing finances of your business, especially if you are utilizing any type of loans, purchases, sales or other financial transactions.What are Corporate Minutes
Corporate minutes are nothing more than a written record of every meeting that is held by the corporation and of the decisions that are made during these meetings. This would include meetings of the directors; it would also include any shareholder meetings that occur. In these types of meetings, many business-related discussions and decisions are made. The minutes are a record of these discussions and decisions. More particularly, corporate minutes are a record of any voting that occurs during the meeting.
Often, corporate minutes are turned into an additional document that is known as a corporate resolution. A corporate resolution is a formally written document that describes a specific action, transaction, or process, that either the directors or shareholders have all agreed needs to occur in order to move the business forward and help it to be successful and profitable. For example, the directors may have a meeting where they all vote and agree that a certain item of machinery or equipment needs to either be sold or purchased by the corporation. The corporate resolution would describe the piece of machinery or equipment and would indicate exactly what the transaction is that will be involved. A vote is then taken and recorded which shows that the corporation has authority to move forward with that transaction.Required by Idaho Law
Idaho, like most States, has a specific statutory requirement for minutes of all meetings to be kept by a corporation. Specifically, Idaho Code § 30-29-1601 states that a corporation “shall maintain the following records: . . . (5) Minutes of all meetings of, and records of all actions taken without a meeting by, its shareholders, its board of directors, and board committees established under section 30-29-825, Idaho Code;”
A failure to satisfy Idaho’s statute quoted above, and keep corporate records such as corporate minutes, and/or corporate resolutions, could lead to the law finding that the corporation doesn’t in fact actually exist. This could be a problem because most people create a corporation for the purpose of limiting their own liability for the actions, transactions, debts, and other liabilities of the business itself. In other words, a person wants to separate themselves individually from the business liabilities that could arise.Keeping Shareholders/Owners Informed
In a small business, usually all shareholders or owners of the business are involved in the transactions of the business on a day-to-day basis. However, when a business becomes a little larger, often the day-to-day operations of the business are given to officers or managers. Additionally, the officers or managers are given directions by a board of directors. Because of this, not all owners of the business are aware of all of the transactions and operations the business is involved in. However, all business owners have a right to review and understand all the records of the business including corporate minutes and corporate resolutions. By keeping these records, all shareholders and owners of the business have the ability to review these records at any time they choose, which gives them the ability to fully understand how the business is functioning. In other words, the keeping good corporate records such as corporate minutes and corporate resolutions allows all of the shareholders to be informed of the business’ ongoing operations.Needed for Corporate Finances
Another reason for keeping good corporate records such as minutes and resolutions is that we no longer live in a spit-and-shake business world. In other words, a business owner usually cannot get a loan for the business just based on their word that the loan will be paid back. Rather, most banks, and other financial institutions require corporate documentation to be provided before they are willing to be involved in any financial transactions with a business.
The documents of these financial institutions usually require are corporate minutes, and/or corporate resolutions that specifically describe the transaction that is being sought for the business and provides corporate approval for it to occur. By requiring this, financial institutions are able to assure themselves that the corporation has approved the transaction and is bound to perform the terms and conditions of the transaction.
Keeping good corporate documents, such as corporate minutes, is not a difficult thing to do. In fact, most businesses don’t even need an attorney to help them do this. However, for individuals who have never kept corporate records, it’s often wise to consult with a good business lawyer who can provide direction on what corporate minutes are and can also provide a format for the corporation to follow in keeping its corporate minutes in place.
We have assisted numerous business clients in the creation of their business and in keeping proper corporate records such as corporate minutes. If you have questions about the corporate records of your business, we are confident that we can help you too.Enlist an Idaho Business Attorney to Help You
Our team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at firstname.lastname@example.org or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.