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The Ultimate Shield
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As long as the 'corporate formalities" are observed, the courts will not allow creditors to "pierce the corporate veil" so as to hold individual board members and staff personally responsible for corporate debts. Also, dissidents will not be able to get the Court to enjoin alleged authorized corporate actions.

Observing the "corporate formalities" means following the bylaws and then obtaining board authority for every corporate action. The minute book is the final word on whether the corporate formalities had been observed.


The minutes are the official record of corporate action. The minutes should not be a substitute for the corporation's newsletter. Some resolutions, perhaps call for an introductory sentence or two but you want to avoid recording too much of the discussion that occurred at the meeting (one persons comments, for example, might later be mistaken for 'official corporate action"). The threshold for inclusion, perhaps, is when someone makes a motion (whether or not the motion was "seconded"). Be sure to state whether the motion was seconded and, upon vote, identify who voted against the motion and who abstained. A standard item on the agenda of each and every board meeting should be the adoption of minutes from prior meetings. A document is not the "minutes" unless and until the board adopts actually passes a resolution adopting it as such.

A sign-in sheet should be attached to the minutes of each meeting so that you can later prove that a quorum was present,


Without a credible minute book, however, there is no way to prove that the corporate formalities had been observed. A minute book should look like minute book. The minutes should be collected into a three ring binder, the minute book should contain a complete paper trail of every board meeting that was ever held from the very beginning until the present. It is very important to be able to show that the present board is operating with proper authority.

At least once a year the board of directors should pass a resolution stating the identity of the incumbent board members and stating their remaining terms. It usually a good idea to do this every time a vacancy is filled and after each board election. Hopefully the minute book will document the "chain of authority" running from the present day back to the date that the articles of incorporation were first filed.