I do a lot of business formations at The Jacobson Law Firm, P.C., and serve as general counsel to many companies as well. I have discovered over the course of many years and many clients that one of the things small companies and entrepreneurs are really bad at is documenting their corporate activity – that is, having annual meetings and memorializing what happened at those meetings. Why is this important? A number of reasons, but a big one is that if you can’t show that you’re “doing the things that companies do”, such as showing that the leaders are accountable to the company/corporation/partnership by having annual meetings, it’s easier to argue that the legal protections that shareholders/members/limited partners enjoy under Texas law should be stripped away. Why is this bad? Because if you can’t hide behind the “corporate shield”, it’s much easier for that plaintiff’s lawyer who sues your company to include you personally, and potentially come after that Monet you have hanging in your bathroom. In other words, your personal assets could be at risk if the corporate veil is pierced.
Now is the time of year that my support staff start sending out reminders and annual meeting worksheets to our clients, so they will be more likely to fit in an annual meeting (or a unanimous consent in lieu of annual meeting) into their year-end calendar. If you’re caught up on your annual minutes, congratulations! If not, do yourself a favor and look over your corporate book, catch up on those minutes and stay current. If your eyes have rolled back in your head by this time, be sure to contact an experienced business lawyer and ask for help to get your corporate ducks in a row. It’s well worth it, and you, business owner and entrepreneur, will sleep better at night.
As always, the above is legal information, not legal advice, and it’s based on Texas law because I’m a Texas lawyer. Every case is different and you should talk your situation over with an experienced attorney if you’re not sure what to do.