The Benefits of Year-End Corporate Record Keeping

With the end of 2012 fast approaching, it is an excellent time to review your record-keeping practices and make sure your records are updated.  As a small-business owner, you invest a significant amount of time and money to ensure your company’s progress and success, and taking the time now to update your records can help in a number of ways.

How to go about updating records?

Regardless of the form of entity, the manner or process for updating your records is fairly simple and straightforward.  First, it is important to review the entity’s governance documents – yes, the documentation you received and may not have read or reviewed since the time you organized your company – because this documentation will advise you as to how to proceed with corporate changes and updates.  So, if you have a corporation, this will be your articles of incorporation and your bylaws; if you have an LLC, this will be your articles of organization and your operating pr management agreement; and if you have a partnership, this will be your partnership agreement. You may have a shareholders’ or close corporation agreement, too.

Even if you have already implemented transactions, changes and updates in and to the business, it is important to ratify those actions by the manner or process defined in the governance documents.  Why?  In order to record the changes or updates and to evidence the fact that such modifications were authorized by the entity.   Failure to ratify and substantiate a change to the business can create issues like stalled or failed business transactions in the future or undue questions from the IRS or State when they audit. It is much easier to make these recordings contemporaneously with the actions so that later partners and outsiders do not question that authority. Also  as some of our clients will attest, the cost of recreating the history of the company years down the road so that you can sell or move or enter into a significant transaction is costly and time consuming.

Subject to the language in your governance documentation, many updates and changes can be authorized in writing.  Other updates may require a meeting – a board meeting, or a meeting between managers, members, or partners – and a vote.  In the event that you call a meeting, here are some things to keep in mind:

  • Be Prepared and Provide Sufficient Notice to Appropriate Parties
  • Make Sure You Have a Quorum or the Necessary Number of Voting Parties to Take Action and Know What Vote is Necessary to Approve the Actions Desired
  • Have an Agenda and Include Potential Ratification of Past Actions, and Other Potential Actions
  • Record Actions Taken at the Meeting and to whom Future Duties were Assigned
  • Get Feedback to Improve Meeting Process and Record-Keeping
  • Contact Outside Counsel in advance of the meeting if you have any questions and consider having counsel present if you anticipate a contentious issue or needing assistance documenting or explaining the situation

~ Rochelle Friedman Walk, Esq. and Matthew A. Welker, Esq., Walk Law Firm, PA

This entry was posted in Uncategorized and tagged , , , , , by Rochelle Friedman Walk, Esq.. Bookmark the permalink.

About Rochelle Friedman Walk, Esq.

Rochelle Friedman Walk, Esq. is an experienced, thoughtful and strategic attorney, business executive and neutral mediator. She has been court-appointed as a receiver and mediator, and is a member of the FINRA arbitration panel. She is known for her negotiating skills and the ability to bring parties together in win-win, creative solutions. She offers a practical and business-oriented approach to the practice of law. Her background in business enables her to relate well to clients and to quickly define the work and potential solutions. In her more than twenty-five years of business and legal experience, she has served as the chief restructuring officer, chief administrative officer, chief legal officer and Business Unit Manager to several national and multi-national business organizations. As an attorney, she has represented clients in a wide range of legal transactions and disputes including complex commercial, insurance coverage, real estate, construction, financial restructuring and employment matters. She has served as an ombudsman in employment, elder care, NAACP, creditor and shareholder matters and has worked with a number of different international unions to resolve concerns. Ms. Walk is a Martindale-Hubbell Preeminient (AV)-rated lawyer, has been named by Tampa Bay Magazine as one of the Top Lawyers in Tampa Bay (July 2010) and is included in Martindale-Hubbell's inaugural and subsequent editions of its Bar Register of Preeminient Women Lawyers (2011, 2012). A graduate of Case Western Reserve University School of Law and Colgate University, she is a Florida Supreme Court Circuit Civil and Appellate certified mediator, licensed to practice law in the States of Florida and Ohio, and is a member of the America Bar Association, Section for Dispute Resolution, the Hillsborough County Bar Association and the Florida Academy of Professional Mediators. She has been recognized by the YWCA as a Woman of Professional Excellence and the Tampa Jewish Community Federation as a Woman of Distinction.She volunteers for SCORE as a presenter on various business topics and serves on the Boards of a number of not-for-profit community agencies in the Tampa Bay area, including a community foundation and assisted living facility. Previously, she served on the Board of a Crisis Nursery.

Leave a Reply

Your email address will not be published.