Annual Corporate Resolutions and Why They're Important

Corporations are required by law to hold annual meetings of the shareholders (or pass written resolutions instead) and keep corporate records up to date. Here’s why this matters:

Avoid the Requirement of Audited Financial Statements

Shareholders are entitled to receive audited financial statements each year. For small corporations, this is an unnecessary expense. If the requirement is not waived in writing by shareholders EACH YEAR, a shareholder could later demand audited statements for several years, costing tens of thousands of dollars.

Ensuring Directors are Properly Appointed

In some jurisdictions, directors are limited to serving for a limited number of years unless re-appointed. Annual reappointment ensures directors have proper authority.

Maintaining Value and Ability to Sell

Banks, investors, and purchasers will want to review your minute book before agreeing to any transaction. An incomplete minute book may cause them to back away from a deal.

Avoiding Issues That Cannot Be Rectified

It may not be possible to obtain necessary signatures at a later date due to a shareholder’s death, incapacity, or dispute. This can make it impossible to bring records into compliance.

Identifying Potential Issues Early

Annual resolutions give shareholders and directors the opportunity to raise concerns. If they sign without objection, it’s evidence they had no issues at that time.

Our corporate legal support subscriptions include preparing annual resolutions of the directors and shareholders.