Do you operate an LLC or Corporation in the state of Ohio?
If so, your organization does have several important record keeping obligations. In this post, we’ll explore a few of the reasons to maintain good records for your business.
Ohio Code for LLCs & Corporations
The Ohio Revised Code requires the Directors or Shareholders of a Corporation and the Managers or Members of a Limited Liability Company to document all annual Shareholder/Member meetings, to receive and consider the Corporation or Limited Liability Company’s financial statements, and to elect directors of the corporation or Managers of the Company.
Shareholders and Members are required by Ohio law to approve any amendments to the Articles of Incorporation or Code of Regulations or, with regards to a Limited Liability Company, any amendments to their Operating Agreements. The Shareholders of the Corporation or Members of the LLC are required to document any changes in capitalization, mergers or consolidations, and any sale or disposition of the Corporation or Limited Liability Company’s assets.
Each Ohio Corporation or Ohio Limited Liability Company is required by law to hold annual Shareholder or Member proceedings to consider the Corporation or Limited Liability Company’s financial statements and to elect Directors of the Corporation or Managers of the Limited Liability Company.
A Corporation or a Limited Liability Company speaks through its Minute Book, which is a complete record of all of the minutes of proceedings and records of the Shareholders of the Corporation or the Members of a Limited Liability Company. While not every action of a Corporation or a Limited Liability Company must be listed, there are certain types of minutes that must be kept and certain actions which must be recorded. These include the annual minutes of the Shareholders of a Corporation or the Members of a Limited Liability Company and the minutes of the annual meeting of the Directors of a Corporation or the Managers of a Limited Liability Company.
The Ohio Revised Code requires that these annual meetings be memorialized in writing by a Corporation or a Limited Liability Company.
Avoid Piercing the Corporate Veil
Not only is it important to document these meetings in writing in order to comply with Ohio law, but it is also important to document these meetings to show that your Corporation or Limited Liability Company is doing its day-to-day business and operating its business on a regular ongoing basis. This record keeping is very important because the absence of Corporation or Company records can expose the Shareholders and Members to personal liability to creditors and customers of the business. One of the ways that creditors and disgruntled customers can pierce the Corporate Veil is to show that the Corporation or Company is not maintaining any records to show that it is operating its business on a regular ongoing basis.
Stay Tuned for Part Two
We’re only getting warmed up on this topic. Stay tuned for part two of our series on record keeping for LLCs and Corporations.
If you have a question about your company’s record keeping requirements, please contact our firm.