How Adequate Corporate Minutes Can Protect Personal Assets of Shareholders

Most business owners do not see the importance of keeping their corporate minutes and updating their corporate records and do not want to spend the time and money to comply with this regulation. They fail to see that a properly maintained adequate corporate minutes and records satisfy the requirement of establishing corporate formality and distinguish the corporation as a separate entity from the shareholders. Directors and shareholders are protected against personal liability because of this compliance.

California Corporations Code Section 1500 states that "Each corporation shall keep adequate and correct books and records of account and shall keep minutes of the proceedings of its shareholders, board and committees of the board and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each. Those minutes and other books and records shall be kept either in written form or in another form capable of being converted into clearly legible tangible form or in any combination of the foregoing. When minutes and other books and records are kept in a form capable of being converted into clearly legible paper form, the clearly legible paper form into which those minutes and other books and records are converted shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been, provided that the paper form accurately portrays the record."

This provision clearly shows that minutes of the proceedings shall serve as admissible evidence that the Directors and Shareholders are acting on behalf of the corporation and not in their personal capacity and that the corporation is separate and distinct from the shareholders. Complete records of minutes of proceedings protect the shareholders from being personally liable to creditors in paying corporate obligations.

Compliance to the above provision entitles the shareholders to the limited liability that the corporate business structure provides. It also places the corporation in the active and good standing status.

Corporate Minutes Online acknowledges the fact that majority of existing corporations are currently non-compliant with record-keeping requirements because of the high legal fees and inconvenience of creating essential legal documents. Corporate Minutes Online goal is to provide a user-friendly and cost-effective online tool that can help users create and manage their own legal documents and stay compliant with the state record keeping requirements.

To know more about reducing your risk and be state-compliant you can visit or send an email to

Posted by Cris Aquino at Apr 02, 2015
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