Does a corporate meeting have to follow formal procedures?
There is no legal requirement that a corporate meeting be conducted in a formal way. Usually, the bylaws will describe the procedure for holding meetings. As a practical matter, the larger the company, the more formal the meetings tend to be. Smaller companies tend to be more informal with their meetings. The important elements should include notice to all participants, opportunity for discussion and voting on issues, and written minutes which document the actions taken at the meeting.
Is there a way to conduct corporate business without meetings?
Yes. Most state corporation laws afford directors and shareholders the right to conduct corporate business without a meeting so long as the participants all agree on the corporate action to be taken and record the action or resolution in written form. Stated in another way, either the shareholders or directors can consent in writing to corporate action without holding a meeting so long as all of the participants are in agreement.
Do I need to prepare written minutes of corporate meetings?
Most business corporation laws require a corporation to keep accurate records and books. With respect to financial and accounting records, this is obvious. All important business decisions should be documented in writing. This will help substantiate corporate actions against attacks by the IRS or creditors. Minutes help resolve disputes between shareholders or directors of a corporation with respect to actions taken or agreements made.
Are there essential requirements for holding a corporate meeting?
The most essential element to insure that a meeting complies with legal requirements is proper notice to all participants. If it is a directors meeting then there must be notice to all directors. If its a shareholders meeting, notice must be given to all shareholders. The bylaws of a corporation usually set out the specific requirements for notice. The notice should clearly state the date, time, and place of the meeting and should also state the purpose of the meeting.
What are corporate formalities and are they necessary?
Traditionally, the management functions of a corporation were conducted by the corporate directors holding meetings and voting on various corporate actions and resolutions. This is one of the attributes that qualified a corporation as a separate legal entity. In a broad sense, the terminology corporate formalities refers to all of those actions taken by a corporation to make it a legal entity separate and apart from the shareholders.