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Resolutions & Meetings

IncSmart Resolution Library
When Secretaries and Managers need it in writing
IncSmart Library
 
Keeping in compliance and piercing the corporate veil.
It is important to stay in compliance with your new company.  The lawsuit protection features will be available only if the integrity of the company as a separate and distinct entity, apart from the individual, is respected by a court and by the Internal Revenue Service.  In matters involving a lawsuit by an injured party, especially if a corporation has no significant assets, the plaintiff will attempt to convince the \court that the corporate entity should not be respected and that the principals of the company should be personally liable. In these cases, the plaintiff is attempting to pierce the corporate veil in order to obtain a judgment against the principals, who may have personal assets sufficient to satisfy a judgment.
 
There are certain rules that a Corporation and Limited Liability Company must follow in order to preserve the protection these entities can bring.  An opposing attorney will look for holes in your entity through these formalities.  And when it finds a problem, it will ask the courts void your entity and call your company an "ALTER EGO". The courts must show fraud and a lack of separate existence.

The Corporation must follow FORMALITIES
You must have meetings for shareholders, board of directors and members
You must keep minutes of these meetings
You must have and observe bylaws or operating agreements
You must accumulate corporate records
The Corporation must have separate banking accounts
You must not co-mingle business money and personal money
You must not co-mingle business assets and personal assets
You must not let shareholders siphon money for personal use
You must accumulate assets in the corporation
You must not be undercapitalized when applying for loans
The Corporation must have functioning officers and directors
You must not let shareholders ad partners if they don't participate
You must not let shareholders pass personal liability to the corporation
You must only sign documents as a representative of your company
You must not sign contracts without having intent to perform


Minutes of a meeting should be prepared by the Secretary of the Corporation, signed, and then approved by the Board or shareholders at the next meeting.  Minutes should always reflect that proper notice was given or waived, who was present and who was absent, and that a quorum was present. Any abstentions or dissents on a vote should be noted for the protection of the director abstaining or dissenting. Keep all your corporate records in a legal binder.

         


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