Every year, I receive a slew of mailings on behalf of my corporate clients from the (self-proclaimed) Corporate Compliance Center, which contains an “Annual Minutes Compliance Notice.” Bearing a slight resemblance to the annual statement of information that must be filed with the California Secretary of State, this notice could fool a less-than-careful reader into thinking that it is an official communication of some kind. But this communication is hardly official. It is a ruse by a private business enterprise to collect $150 for filling in a form that I see as being of no value whatsoever.
While the notice correctly states that California corporations are required to keep minutes of a shareholder, director, and committee meetings, it would be wrong to assume that filling out the form and paying $150 would result in compliance with corporate law. For one thing, the form is devoid of information needed to prepare minutes of committee meetings. More importantly, the form does not even promise to prepare board minutes or shareholder minutes. Instead, it promises a “Certificate of Minutes.” A certificate of minutes that is prepared without the minutes being adopted is of no legal effect!
To adopt board minutes without a meeting, written consent in lieu of a meeting must be signed by all directors. Likewise, to elect directors without a meeting, written consent in lieu of a meeting must be signed by all shareholders. Certainly, the Corporate Compliance Center can’t sign on behalf of directors or shareholders (the form does even not ask for the names of shareholders). Since only a “certificate of minutes” is promised, I would not expect anything more than such a “certificate.” There is nothing in California Corporations Code that validates such a so-called “certificate of minutes.”
When clients who receive this “Annual Minutes Compliance Notice” ask me what they should do with it, the answer is simple: throw it in the trash. And, of course, have me prepare the minutes properly.
If you need assistance with the arbitration, buy-sell agreements, or outside general counsel, contact Attorney Richard Burt. Serving San Jose, CA, and all of the San Francisco Bay areas, Mr. Burt can be reached at (408) 286-7333 or by filling out the online contact form.