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Importance of Annual Meetings for California Corporations

Did you know that failing to address your company’s corporate and legal compliance issues can lead to costly and avoidable consequences such as:

-Legal claims by employees, shareholders, vendors or customers

-Personal liability of owners/managers for company obligations

-The potential for a dissolution of your company

-Limited access to new capital or loans

-A negative company image

-Increased costs of doing business

The good news is this:Many legal issues can be addressed at a relatively low cost compared to the expense of facing one or more of these consequences. For example, ensuring your corporation’s annual minutes have been timely prepared and executed typically takes only a few hours of time and goes a long way in avoiding the potential personal liability being asserted against the company’s shareholders in a lawsuit. In other words, being proactive rather than reactive can save a company and its owners big bucks!

For corporations and LLC’s which have formed a board of directors, the burden of complying with the California Corporation’s Code can be minimized through use of written consents. California law permits actions to be taken both by shareholders and directors without a meeting if all appropriate persons consent in writing. A provision allowing for written consents is usually included in the company’s bylaws, as is the date, time and place of annual meetings.

One of the greatest problems owners often have is knowing when action by the shareholders or board of directors is necessary. While a corporation’s bylaws, along with the Corporation’s Code, will define the extent of authority granted to shareholders and board members, generally, any action which is not what lawyers call “in the ordinary course of business” typically requires specific approval by the board of directors. Some actions, such as selling any substantial part of the corporation’s assets, a merger, or an amendment to the articles of incorporation or bylaws usually require the consent of shareholders as well.

“What Constitutes “Not in the Ordinary Course of Business”?

Actions which are generally considered not to be in the ordinary course of business, and therefore require board action, include:

-The purchase by the corporation of expensive items of equipment or of land (unless it is for sale as inventory);

-The issuance of additional shares (which may require registration as well);

-The granting of options to employees to purchase shares (which may also require registration);

-The signing of contacts which will commit the corporation to substantial tasks, which will bind the corporation for a long period of time or which involve high dollar amounts or unusual risks;

-The signing of employment contacts with corporate officers;

-Almost any transaction between the corporation and its shareholders or executive officers; and,

-The borrowing of money by the corporation or the loaning of money by the corporation.

We Can Help!

With more than 80 years of collective experience, the award-winning and AV-rated attorneys at Gehres Law Group, P.C. focus on preventing and solving legal problems before they spiral out of control, saving our clients a great deal of time, distress, and money. We offer clients an extensive and diverse set of skills, with one-on-one attention for each client, as well as collaboration among our attorneys and staff as client needs require.

As a client-focused, full-service firm, each business and estate planning client receives a prompt and thorough examination of their legal needs from our experienced attorneys. Each of our lawyers have been licensed to practice law for more than 10 years, and most have been licensed for 19 years or more. These years of hard-earned experience and results, along with our conservative billing practices, lead to concrete and cost-effective legal advice and strategies, without the waste caused by missteps and misjudgments often made by less experienced lawyers.

Whether you need business and corporate law services, contract drafting, business or commercial litigation services, intellectual property representation, employment law advice, estate and succession planning, or other business and commercial legal services, our diversity makes us unique in seeking to achieve the best results possible for each client. We know our success is your success and live by this credo every day of every year, working to meet and exceed your expectations.

Call or write us today to obtain the peace of mind that comes with knowing your business is covered.

By | 2017-02-03T12:48:15+00:00 February 3rd, 2017|Business Law, Contracts, Corporate Law|Comments Off on Importance of Annual Meetings for California Corporations