As the year draws to a close, business owners are often caught up in the hustle of financial assessments, tax preparations, and strategic planning for the upcoming year. However, there’s a crucial aspect that tends to be overlooked: a year-end company legal records checkup. This process is not just a mere formality; it’s a vital health check for your business’s legal and regulatory compliance.
Understanding the Importance of Company Legal Records
Company legal records are the backbone of your business’s legal structure. They include important documents such as your articles of incorporation, operating agreement, bylaws, meeting minutes, stock and member ledgers, and resolutions. These documents serve as a legal record of the decisions made and the actions taken by your company. They are not only crucial for internal governance but also play a significant role in demonstrating compliance with state and federal laws.
Why a Year-End Review of Records is Critical
- Ensuring Legal Compliance: Regular review of your company legal records ensures that your business complies with the relevant laws and regulations. This compliance is critical to avoid fines, penalties, or legal challenges.
- Facilitating Financial Reviews and Audits: Accurate and up-to-date records are essential for financial audits and reviews. They provide auditors with a clear picture of your business’s operations and governance.
- Preparing for Potential Litigation: In the event of legal disputes, your company legal records can be your best defense. They provide evidence of the legality and propriety of your business decisions and actions.
- Aiding in Business Decisions and Strategy: Reviewing your company legal records can offer valuable insights into past decisions and their outcomes, guiding future business strategies.
- Maintaining Corporate Veil: For corporations and LLCs, maintaining accurate records is key to preserving the corporate veil, which protects your personal assets from business liabilities.
Key Areas to Focus During the Records Review
- Corporate Record Books (including Bylaws, minutes, and resolutions) to ensure completeness and that all actions have been properly documented and signed.
- Bylaws and Operating Agreements: Review and update them to reflect current operations and laws.
- Stock or Membership Ledgers: Verify that they accurately reflect current ownership.
Implementing the Review
- Schedule the Checkup: Set a specific time each year for this review, making it a part of your annual business routine.
- Involve Key Personnel: Include your law firm, in-house legal team, accountants, and key executives in the process.
- Review and Update Documents: Carefully examine each record, updating and amending where necessary.
- Store Records Securely: Ensure that all updated and reviewed records are stored securely yet are accessible when needed.
- Seek Legal Assistance: Consider consulting with a business attorney to ensure thoroughness and compliance.
A year-end company legal records checkup is not just a good business practice; it’s a critical step in safeguarding your business’s legal health. It ensures compliance, aids in financial and legal processes, and contributes to the overall strategic planning of your company. As a business owner, prioritizing this annual checkup can save you from potential legal headaches and set a strong foundation for the year ahead.
Special Year-End Offer
Understanding the importance of this process, we are pleased to offer a comprehensive 2023 Year-End Company Legal Records Checkup for a one-time fee of $375. This includes review and evaluation of the following documents to determine if action is needed:
- Corporate Record Book (including Bylaws, minutes, resolutions, stock ledgers)
- Close Corporation Agreement
- Partnership Agreement
- Operating Agreement (including membership ledger)
- Price: $375
If further action is required, we will credit the $375 fee toward the cost of additional legal services regarding the records reviewed.
To learn more about this essential service or to schedule your review, please contact our Business Transaction Practice Group at (216) 573-6000 or [email protected]. Our team is ready to assist you in ensuring that your company legal records are thorough, up-to-date, and in full compliance with legal standards.
George V. Pilat is a Partner at Gertsburg Licata and Leader of the Business Transaction Practice Group, with over 35 years of legal expertise, specializing in Business & Commercial Law, Directors & Officers Liability, Employment & Labor Law, Insurance Agents & Brokers, Insurance Coverage & Bad Faith, and Professional Liability & Licensing. With a background advising small and medium-sized businesses, George offers comprehensive legal guidance in business formation, transactions, and litigation. His extensive experience encompasses insurance law, corporate transactions, commercial litigation, real estate, construction, intellectual property, employment law, estate planning, and probate. Actively involved in industry organizations like the Insurance Board of Northern Ohio and the Great Lakes Funding Network, George serves as a trusted “Legal Business Advisor” to clients, aiding them in addressing challenges and enhancing business efficiency while minimizing liability. A resident of Broadview Heights, George can be contacted at [email protected] or (216) 573-6000 x0714.
Relevant Gertsburg Licata Article(s):
What Every Business Owner and CEO Should Do Before December 31
Disclaimer: The information provided in this article is intended for general informational purposes only and should not be construed as legal advice. It does not establish an attorney-client relationship, and any reliance on the information contained herein is done at your own risk. For specific legal guidance tailored to your business and jurisdiction, it is recommended to consult with a qualified attorney who can provide professional advice based on your unique circumstances.
© 2023 Gertsburg Licata Co., LPA
