Legal "Audits" of Your Corporation
Because
the day-to-day operation of a corporation is geared primarily
toward the goal of increasing business, we often find that
certain legal matters are postponed or even forgotten with
time. Both legal and business issues should be addressed periodically.
The following
is a checklist of items which Huck Bouma PC uses to help our business owner clients consider
issues which may need to be addressed by the attorney, accountant,
or business adviser. The checklist is not all-inclusive, of
course, and can be tailored to an individual corporation.
But, again, we have found it to be a useful tool in assisting
our clients in identifying areas of their businesses which
may require attention.
CHECKLIST
_ Have
you had an annual meeting of Shareholders and Directors?
_ Are
your annual reports to the Secretary of State current?
_ Are
your corporate minutes up to date?
_ If your
corporation is authorized to do business in a state other
than Illinois,
are that state’s filing requirements current?
_ When
have you last reviewed any Buy-Sell Agreements and employment
contracts?
_ Have
you reviewed leases, service agreements and other third
party contracts
for pertinent expiration and/or option dates?
_ When
did you last review any employee benefit plans or employee
handbooks?
UPDATING CORPORATE MINUTE BOOKS
We have
found that a contemporaneously maintained corporate minute
book can be decisive in IRS audits, tax cases and civil cases
seeking to impose liability upon corporate officers and directors
or to characterize corporate actions in a manner that is unfavorable
to the corporation.
CORPORATE ACTIONS REQUIRING SHAREHOLDERS AND/OR DIRECTORS
APPROVAL:
• Election
of the members of the Board of Directors
• Fundamental
changes in the corporate structure
• Issuance
of corporate stock or other securities
• Compensation:
any change in officer’s salaries
• Any
“insider” transactions between the company and its shareholders,
directors or officers
• Any
bonuses paid
• Any
dividends declared or distributions made
• Election
of officers
• Contributions
made to retirement plans
• Corporate
loans made
• Changes
made to or adoption of fringe benefits (pension, profit
sharing plans, reimbursement of travel or car expenses of
employees)
• Additions/terminations
of major contracts affecting the corporation concluded (leases,
real/personal property, sale/purchase of any assets other
than inventory, sale/purchase/mort-gage of real estate,
employment contracts, merger/consolidations/dissolution
contract with director, secured transactions, joint ventures)
• Significant
changes made affecting the corporation capital structure
(sell/redeem bonds, change the basic nature of business
activity, issue/redeem/ cancel common stock, establish or
change restrictions on corporate stock, buy/sell agreements)
• Matters
affecting tax returns (election/termination of Subchapter
S status, payment of charitable contributions, execution
of IRS closing agreement, change of accounting method, expense/amortize
research and development costs, adopt/change fiscal year)
• Miscellaneous
matters (establish/change insurance, retain accountant,
attorney, engineer, architect, or other professional person,
change name of corporation, its registered agent or office,
authorize litigation, adopt/change officer of director,
indemnification program, adopt/change bank, change articles
of incorporation or by-laws)
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2004 Huck Bouma, P.C.
