{4 minutes to read} Are you a shareholder of a corporation just realizing that your corporate documents are out of date or not current? In this article, I'm going to explain to you how you can figure that out and what to do if your corporate documents are out of date.
Corporations, but not LLCs, under most statutes in the country — and certainly under Maryland law where I practice — are required to have certain corporate documents to be validly formed, and validly operate in the future. I have a previous video about what it takes to create a corporation. For a corporation to continue to operate under the statutes on an ongoing basis, the shareholders, and the Board of the corporation must have annual meetings. Minutes of those meetings must be drafted and maintained in the corporate documents. The shareholder's biggest obligation is to elect the Board. The biggest obligation of the Board is to elect officers, and generally, the officers are the people who run the company. This applies, whether you have one shareholder or 20. (A meeting with one person might sound silly, but if that's the case, you can draft a consent in lieu of a meeting.) The shareholders and the board are required to have annual meetings, and draft, and maintain the minutes of those meetings in the records.
What happens if you're looking at your corporate documents because maybe your company is entering into a commercial lease and the potential landlord has asked for the latest minutes, your Articles of Incorporation, or a list of the officers? Maybe you're selling assets or entering into a loan agreement, and the lender wants to see the most current corporate documents. If you go back to your book of documents and realize you haven't done anything for 10 years, it's not a fatal mistake. Fortunately, we can do a process called a “bring to date.”
What we will do in that situation is ask you to provide us with all the documents that you have. We'll look them over, and let you know what needs to be there. We do not go back, create documents, and backdate them. We do what is called a Ratification Resolution, where either the Board or the shareholders ratify all those acts taken in the past by either of those bodies, to make them legal. It requires a little bit of time to go through not only the documents you have but to ask the officers or managers of the company, what has been happening in practice because we want to make sure that what's happening in practice has been approved, even on a ratification basis. Once we get all that information, we draft those documents and get the proper people to sign them. Your company is then basically up to date with its corporate documents. From then on, you must keep them up to date annually.
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