If the business you operate is incorporated, you should have some formal method of keeping track of your shareholders meetings, the meetings of your board of directors, and any other subcommittee meetings that your cooperation may have. Your corporate kit or corporate book should also contain a listing of all of the shares held in your company, certificate of organization, bylaws and any other important waivers of notice or other documents.
The Sections of a Corporate Kit or Corporate Book
Certificate of Organization
The certificate of organization is a document that you file with the Massachusetts Secretary of State’s office which indicates the number of shares that your corporation has outstanding, any classes of those shares, ownership interests, and other important data that the public and state needs to know about your cooperation. A copy of this document along with a certificate of good standing should be kept in the front of your corporate book or corporate kit.
By laws
The bylaws of your corporation should also be kept in your corporate book or corporate kit. Bylaws will spell out for all of the executive level players in your corporation the exact rules that the corporation operates by. By laws will usually determine matters such as voting rights, a definition of quorum at different meetings, and many other important matters specific to your corporation such as:
- Where shareholder’s meetings are to be held
- Where and when annual meetings are to be held
- Details about special meetings
- How notice of these meetings will be handled
- Whether a proxy may stand in for a shareholder
- How consent is to be achieved when no meeting is held
- The power held by directors of the business
- How many Directors represent the business
- How Directors are nominated
- What happens when a Director cannot serve in their position
- How often the Board of Directors must meet
- How Directors can be removed
- Similar issues (as above) applied to Officers of the business
- Roles of Officers of the corporation
- How capital excess and loss is handled
- much, much more
Meeting Minutes Section
This section should begin with any waivers of notice of meetings (if required). Massachusetts requires notice for certain meetings held by a corporation, in lieu of that notice, it is acceptable for the members of a that group to sign a waiver of notice indicating that day do not require notice for attendance at that specific meeting. Your corporate kit or book should contain waivers of notice that are blank as well as signed notices applicable to a specific meeting.
Statement of The Incorporator Are or Incorporators
This document is a statement by the incorporator or incorporators that the person or people who filed the certificate of organization with the Massachusetts Secretary of State’s office has resigned their position as such, and may also indicate that person taking on a new role if applicable.
Initial Shareholders Meeting
The initial Shareholders meeting document explains and appoints any Directors of the corporation. This Shareholders meeting should also accept the bylaws of the organization and discuss any other matter important to the Shareholders.
Initial Meeting of The Board of Directors
This document should detail by appointment or election the Officers of the organization. Technically Officers have already been named in the certificate of organization filed by the incorporators, but, a restatement if applicable, of the names and positions associated with these directors and Officers should be accomplished in these meeting minutes.
Share Certificates
In this section of the corporate book should be kept the stock certificates issued by the corporation to the shareholders. The corporation should ensure that these stock certificates appropriately represent the number of shares held, the value of those shares, who hold the share, and on the back of each stock certificate that language exists to facilitate the transfer of share if allowable under the Bylaws or Shareholders Agreement.
Stock Certificate Record
This section of your corporate book for your Massachusetts corporation should contain a list of who owns what stock, the class of that stock, and any information related to the transfer of that stock to another party – should your Bylaws or Shareholders Agreement allow for transfer.
Shareholders Agreement Section
You will want to keep your Shareholders Agreement in the section marked for this purpose. The Shareholders Agreement spells out the rules that Shareholders must operate by. This agreement answers questions like:
1. What do shareholders take for profits?
2. How do shareholders deal with losses?
3. Shareholder’s ability to transfer stock certificates
4. What happens to a person’s ownership interests upon their death disability or other infirmity number
These are just some examples of what should be included in a Shareholders Agreement, but keep in mind that the Shareholders Agreement is a complex document which contains many different options based upon the needs of the Shareholders of the corporation and Massachusetts laws governing corporations.
Why Online Services Do Not Measure Up
It is very common to find services that will write Bylaws, a Shareholders Agreement, corporate minutes and other important documents based upon the use of software that reportedly takes into account Massachusetts laws. While these organizations do a pretty fair job at getting this right some of the time, it is my personal opinion that they cannot possibly get it right all of the time. Also, most of these organizations have no personal or business liability for the product that they produce. Unlike an attorney who maintains malpractice insurance, an online company that creates Bylaws, Shareholder Agreements, and corporate minutes in one corporate book is not going to be liable in most cases for any errors that may occur with their work.
A good attorney is going to be able to parse out the application of Massachusetts law regarding corporations and apply them to your specific circumstances, asking the right questions at the right time and making appropriate changes as a result. I have seen the output from a number of these companies and was amazed to find missing information, was disappointed at the generic look of the product, and frustrated with the lack of explanation of how the business member is to interpret the Bylaws, Shareholders Agreement and other critical documents. This is another aspect that an attorney brings or should bring to the incorporation of a business, that is, an explanation of how you need to conduct your business in order to comply with Massachusetts law and an explanation of the various documents required and what each means. When you get this kind of a thorough explanation you will understand the choices that you make and how those choices affect your business.
DISCLAIMER:
The information provided in the pages and posts of this website are for general informational purposes only. The information presented on this site is not legal advice, and no attorney-client relationship is formed by the use of this site.
