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What are Director's Minutes?
What are director’s minutes? Director’s minutes are the minutes of the directors of corporations. The director’s function is to give direction to the management on the corporation (the management being the officers of the corporation). Directors elect who the officers of the corporation are and also make major policy decisions such as opening branch offices and making substantial purchases. If there is a change in the business plan, they adopt that and you incorporate this all into the director’s minutes, as well as election of the officers each year.
Many times the directors, the officers and the shareholders are all the same when you have a small corporation. However, if you want to be treated as a corporation you need to act like a corporation and one of the functions is to have directors minutes as well as shareholder minutes. The directors are elected by the shareholders and we have shareholders minutes. Once the directors are elected, the directors then elect the officers. The shareholders don’t directly elect the officers of the corporation. So you need to have two sets of minutes each year to keep your corporation operating and appearing that it is serving as a corporation. Otherwise, it can be disregarded or unprotected if it is sued, which is the reason why people like to have corporations.
There is protection of their individual asset from those who make a suit to "pierce the corporate veil". One of the first things they ask for is to look at your corporate record book to see if you do have directors minutes and shareholders minutes and to see if you’ve been conducting business as a corporation (or whether you’ve just been writing checks out to pay your utility bills and treating it as a paper entity.) So if you have any questions about your corporation, directors minutes or shareholders minutes give me a call at (727) 847-2288. Thank you.