Are LLC Companies Required by Law to Maintain Meeting Minutes?

By Joe Stone

Maintaining minutes of company meetings is legally required of a corporation so that the personal assets of the shareholders are protected from the corporation's liabilities. Because a partnership's owners are personally responsible for all business obligations, there is no legal requirement for partnerships to maintain minutes of meetings. LLCs fall somewhere between the two business entities: maintaining minutes of meetings is not required, but LLCs can benefit from adequate record keeping so that owners can receive the same liability protection as corporate shareholders.

Maintaining minutes of company meetings is legally required of a corporation so that the personal assets of the shareholders are protected from the corporation's liabilities. Because a partnership's owners are personally responsible for all business obligations, there is no legal requirement for partnerships to maintain minutes of meetings. LLCs fall somewhere between the two business entities: maintaining minutes of meetings is not required, but LLCs can benefit from adequate record keeping so that owners can receive the same liability protection as corporate shareholders.

LLC Structure

Until the advent of LLCs, businesses essentially chose between the formal structure of a corporation or the informal structure of a partnership, depending on what benefit was most important to them -- limited liability or single taxation. The LLC is designed to combine both benefits in one business entity. Like a corporation, an LLC can only be formed by filing the required documentation, called articles of organization or certificate of formation, with the appropriate state office. However, like a partnership, an LLC can dispense with other corporate formalities such as formal meetings and maintaining minutes of meetings.

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Piercing the Veil

The legal concept known as “piercing the corporate veil” is a significant reason why maintaining minutes of meetings is required for corporations. Creditors use this concept to argue to a court that, under particular circumstances, the corporate veil should be pierced so that its debts become liabilities to be paid from the personal assets of the shareholders. The circumstances needed to successfully argue that the corporate veil should be pierced typically center around whether the shareholders respected and engaged in corporate formalities, such as conducting regular meetings and maintaining minutes of meetings, or if they essentially treated the corporation’s activity and their activity as one and the same. LLC owners can face these same issues if their conduct does not reflect a respect for the separateness of the LLC’s activity from their own.

LLC Case Law Development

Because most states did not enact LLC laws until the mid-1990s, LLCs are still a relatively new business entity. In contrast to corporate law, there are very few court opinions interpreting LLC laws in the context of business disputes. This means that there is a level of uncertainty as to how LLC laws will be enforced in the future, particularly with respect to whether legal concepts applied to corporations, such as piercing the corporate veil, will also be applied to LLCs. However, case law is developing, such as in Connecticut where a September 2010 court opinion addressed the issue of whether a creditor could pierce the veil of an LLC and hold the members liable for its debts. The creditor’s argument was rejected by the court, which noted that the LLC abided by certain formalities, such as keeping separate books and filing required documents with the state to indicate that the LLC was a separate and distinct entity from its members.

LLC Record Requirements

Although LLCs are not required to hold meetings or maintain minutes of meetings, there are other record-keeping requirements specified in state LLC laws. These requirements usually include keeping records at the LLC's principal place of business that document such matters as: the full name and address of all members, past and present; the LLC’s state-filed formation document; the members’ operating agreement, if any; and the amount of each member’s contribution to the formation of the LLC, whether in cash or services. Complying with these LLC record-keeping requirements is important in the event a creditor should attempt to enforce the debts of the LLC against any of its members.

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LLC Vs. C Corporation

Limited liability companies and C corporations are both business entities. They are legally distinct entities that are treated separately from their owners, known as members and shareholders, respectively. State laws govern both LLCs and C corporations and these laws vary across state lines in detail. However, many of the same principals for LLCs and C corporations exist in all states. They have differences when it comes to management, business formalities, owner liability and tax treatment.

LLC Minutes Requirements

One of the major benefits for a small business owner in choosing to form a limited liability company, or LLC, over a corporation is that maintaining the formalities for an LLC is a simpler process. If the owners of a corporation or LLC do not maintain legal formalities, a creditor may be able to pierce the corporate veil and hold the business owners personally responsible for business debts. Unlike a corporation, however, an LLC is not required to hold annual meetings.

How to Understand an LLC

Limited liability companies combine the advantages and disadvantages of corporations and private partnerships. Understanding an LLC involves discovering which aspects of this unique form of business organization resemble traditional models. LLCs can be an ideal business form for particular companies and industries, but their limitations make them a model that is not suited to every situation.

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