S Corporation Meeting Minutes Requirements

By Edward A. Haman, J.D.

S Corporation Meeting Minutes Requirements

By Edward A. Haman, J.D.

Keeping adequate minutes of shareholder and board meetings of your S corporation is necessary to meet state requirements and to help maintain the shareholders' limitation of liability. Here's what you need to know about S corporation minutes.

Businesspeople with laptops talking in conference room

What Are Minutes?

Meeting minutes are simply a summary of what took place at a meeting. They do not need to contain everything that occurred but should include the date and place of the meeting, who was present, what matters were discussed, and what decisions were made.

Generally, a corporation's bylaws will set forth the number of shareholders or directors that are required to be present for a meeting to be held. This minimum number is called a "quorum." The minutes should reflect that any action was approved with a quorum present.

Even if not legally required, minutes serve a practical purpose. They are a record of what was decided, which is better than relying on the memories of those present at the meeting. They can also be a valuable record in the event of a lawsuit against the corporation, including a legal action by shareholders.

Legal Requirements for S Corp. Meeting Minutes

Corporations are formed under state law and, therefore, must comply with the laws of the state in which they are incorporated. One of the basic requirements for a corporation is that it keep certain records, among which are minutes of the meetings of the shareholders and the board of directors. Minutes may be kept either in hard copy (hand-written, typed, or printed-out) or in a form capable of being printed (such as on a computer).

Whether a corporation is registered with the Internal Revenue Service (IRS) as a C corporation or an S corporation is important for tax considerations, but it does not affect the requirement that adequate minutes be kept of meetings.

State laws typically require that at least one meeting of the shareholders be held each year. One purpose of the annual shareholders meeting is to elect the board of directors.

Upon the request of corporate shareholders, directors, or officers, the minutes, along with other corporate records, must be made available for inspection. Failure to do so allows the person seeking access to request a court order for review of the records.

Meeting Minutes and the IRS

There is no federal requirement that a corporation keep minutes of its meetings. However, in the event of an audit, you can expect the IRS to ask to examine all of the corporate records, including meeting minutes. Being able to produce meeting minutes will help indicate to the IRS that you are properly operating the business.

Alternatives to Meetings and Minutes

Generally, state corporation laws allow the shareholders to approve a proposed action of the corporation without holding a meeting. This avoids the necessity of having to get all of the shareholders together to take a vote. In order to do this, the action must be consented to by the quorum and their consent must be in writing. This most often occurs in a corporation with a small number of shareholders, when all of the shareholders agree to the action. The written consent takes the place of minutes and is kept with the corporate records.

Writing Corporate Minutes

State laws requiring that minutes be kept do not specify what information the minutes should contain. When it comes to writing minutes, you can be as detailed as you wish. The following is a very basic example of minutes for a special board meeting of a fictional corporation:

Capt. Jack Pet Supplies, Inc. Board Meeting Minutes

Time and place: 2 p.m., July 15, 2017. 211 Pine Ave., Mayfield, OH. Meeting called to order at 2 p.m. by Chair George Haskell.

Present were board members Ward Cleaver, June Cleaver, George Haskell, and Fred Rutherford, constituting a quorum; and corporation secretary-treasurer Cornelia Rayburn. Board member Edward Haskell was absent.

June meeting minutes were approved.

Proposal of secretary-treasurer Cornelia Rayburn to renew the lease of the building at 211 Pine Ave. was approved by unanimous vote of the board members present.

Meeting adjourned at 2:15 p.m. Minutes submitted by secretary-treasurer Cornelia Rayburn.

Failure to Keep Minutes

One of the main purposes for forming a corporation is to limit the personal liability of the shareholders. However, in certain circumstances, the law allows shareholders to be personally sued. One of these circumstances is where the corporation has not kept records as required by state law. If adequate minutes are not kept, the shareholders may be held personally liable for corporate debts.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.