Texas corporations are required to have an annual meeting of shareholders and an annual meeting of directors. These meetings and their proper documentation are very important.
There should be two sets of Minutes from the annual meetings; the Minutes of the Annual Meeting of the Shareholders and the Minutes of the Annual Meeting of the Board of Directors. The purpose of the annual meeting of shareholders is to elect the Board of Directors. The purpose of the annual meeting of directors is to first appoint the officers that will carry out the day-to-day operations of the corporation, and second to set and approve the general direction of the corporation for matters that are outside the regular course of the corporation’s business.
LLCs should maintain minutes as well, although many single member, member managed LLCs do not. We recommend to our client that all LLCs conduct an annual meeting and maintain minutes. If nothing else, it is evidence that they recognize that it is a separate legal entity that they are managing.
While case law is very limited with LLCs, we anticipate that there will be changes in the law that will make LLCs subject to “piercing the veil” like you have with corporations. The more evidence you have that you are following all formalities, and not treating the entity like your private piggy bank or alter ego, the better.
Like corporations, an LLCs’ governing authority (members or managers) are required to call meetings and have votes on actions not apparently for carrying out the ordinary course of business of the company. That is akin to a special meeting of the Board of Directors in a corporation. You should always prepare minutes of any special meeting of the Board.
If you need assistance with preparing your minutes, please call or email. We can help!