Each time the corporation holds an annual meeting or any special conferences, the secretary should keep minutes of the meeting discussions. The minutes may be simple, but should specify the following:
- Voting results for each resolution
- Written consents before or soon after the approved actions
If the corporation does not keep updated minutes, the IRS may look at discrepancies between the corporate resolutions adopted by the board of directors (and shareholders, if applicable) and the actions of the corporation. It may also reclassify expense reimbursement as dividends and insider loans as additional capital. Both will result in additional taxes and penalties, because the reclassification moves certain things to "income."
During lawsuits, the plaintiff's attorneys can ask for corporate meeting minutes as part of the discovery process. If the minutes are not updated, it can be inferred that the officers and shareholders acted without authorization of a corporate resolution. It may also "pierce the corporate veil", allowing the winner of a lawsuit access to personal assets of the officers and shareholders.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.