Business Lawyers in Columbus, Ohio
By Drew Stevens - January 17, 2019 - Corporate & Business
Even if you’ve never dealt with a business attorney in Columbus, Ohio, chances are that if your startup or business is a corporation, you’ve heard of the term “corporate formalities.” One of the core components of corporate formalities is maintaining the corporate minute book.
Many assume a corporate minute book is only required for Fortune 500 companies and public corporations. False. No matter how big or how young your company is, you need create—and more importantly—maintain your corporate minute book.
You need a corporate minute book for a number of reasons. Seeking funding? Whether you’re a startup seeking venture capital funding or a mature, mid-market business looking for more traditional lending from a bank, whomever is contemplating writing you a check will want to see your corporate minute book.
If you’re involved in M&A and you’re thinking about selling your company, the buyer will absolutely insist on inspecting your corporate records. When tax time comes, your CPA or accountant may wish to review your corporate book for major actions, in order to better classify assets and liabilities.
Still not convinced you need to keep and maintain your corporate minute book? For the remaining naysayers, how about the fact that a corporate minute book is required by law.
Under Ohio law, whether you’re a for-profit corporation (Ohio Revised Code section 1701.37) or a non-profit corporation (Ohio Revised Code section 1702.15), you are legally required to keep “correct and complete” books and records.
Further, equity holders of both for-profit and non-profit corporations have statutory inspection rights. Under Ohio corporate law and Ohio Revised Code 1701.37(C), any shareholder can inspect the books and records of the corporation. Under Ohio non-profit law and Ohio Revised Code 1702.15, the members of the non-profit corporation can inspect the corporate minute book.
Bottom line: apart from being required by law, maintaining a corporate minute book is necessary for a number of reasons, including seeking funding, selling your business, and for accounting purposes.
Resist the temptation to only update your minute book when you absolutely have to, as this can cost way more than periodic and regular record keeping. Any good Columbus, Ohio business lawyer can tell horror stories of the amount of time it can take to go back and draft and organize the last few years’ of directors/shareholder actions and minutes.
If nothing else, keep in mind this general rule: if your corporation takes a major action, it should be documented in your corporate minute book. For starters, depending on what state your corporation is domiciled, your corporate records should begin with your certificate of incorporation or articles of incorporation and your bylaws or code or regulations. Any amendments to said articles of incorporation, certificate of incorporation, bylaws, and code of regulations should also be included.
For further reference, if you’re a Delaware corporation, you’ll have a certificate of incorporation and bylaws. If you’re an Ohio corporation, you’ll include your articles of incorporation and your code of regulations.
As your startup or company grows, Ohio corporate law requires your corporation to include minutes of meetings of shareholders, directors, and committees of directors in your corporate minute book. All resolutions of both shareholders and directors must also be included.
Finally, don’t forget to periodically review and update your roster of shareholders. Under Ohio corporate law and Ohio Revised Code section 1701.37, your corporation is required to maintain records of the corporation’s shareholders. This includes the names and addresses of all shareholders, as well as the number of shares held and the class of shares held.
It can be easy to put off maintaining your corporate minute book. If you think you need the assistance of an experienced Columbus, Ohio business law attorney, contact our firm today.