The corporate structure offers a variety of benefits. There can be major tax benefits and major liability benefits. You see, the corporate structure offers owners limited liability meaning they will not be held liable for actions taken by the corporation. In some situations, however, the “corporate veil” protecting owners from liability may be pierced if a court believes the corporation is merely a front. As such, it is critical for corporate formalities to be upheld or risk legal consequences and putting your personal assets at risk. Observing corporate formalities shows the world that the corporation is not merely an extension of you, but is a separate legal entity.
How Often Do Shareholders Need to Meet?
Every state has its own laws and requirements for corporations and the corporate formalities that will be required to observe. Failure to honor these requirements will jeopardize the corporation’s status as separate legal entity. So, you will want to be sure to see to it that the proper recordkeeping protocol is established and enforced. You will also want to ensure that the meeting requirements for the corporation are also enforced and all legally required duties for the corporation are performed as well.
While requirements may vary slightly between states, it is often the case that corporations must have certain scheduled meeting and must also have accurate recordkeeping. Furthermore, fiduciary duties to the corporation must be upheld. More specifically, Texas requires all business corporations established in the state to have an annual shareholder meeting.
Shareholder meetings are a regulatory requirement of corporations. Should a shareholder meeting not be held within 13 months of the previous shareholder meeting, a shareholder has the right to pursue a court order requiring the corporate board of directors to call the annual shareholder meeting. Shareholders are entitled to proper notice of a shareholder meeting and this notice will often include important details concerning the meeting. For instance, the time and date will be included as will often be accompanied by an agenda for the meeting. Shareholder meetings often focus on things such as the election of board of directors members. Other business to be addressed at shareholders meetings will likely include approval of an accounting firm to be tasked with reviewing the corporation’s financial records. There is also likely to be an opportunity for shareholders to vote on proposals that have been submitted to the board by shareholders or by corporate management.
Business Law Attorney
Are you considering the establishment of a corporation in Texas? The benefits of a corporate structure are significant and can be the right choice for a number of business endeavors. It is important, however, to set your corporation right and help ensure that it begins and remains in compliance with all applicable state laws. For assistance establishing your corporation the right way, you can count on the team at the Kumar Law Firm. Contact us today.