As the year comes to an end, assessing corporate governance of operating entities is a prudent practice to ensure that all requisite annual actions have taken place per the terms of the bylaws, operating agreement or comparable governing documents?including holding requisite meetings and making appointments to director and officer positions. It also is important to perform an assessment to determine whether other actions taken place during the year have been appropriately approved and memorialized.
It is often easy to get wrapped up in the day-to-day operations of a business without considering the maintenance necessary for the corporate structure. A company?s governing documents will set forth the regularity by which a company should hold meetings and appoint officers. It also will specify the steps necessary to approve certain actions, which includes distribution of funds in certain instances, as well as certain large-scale decisions affecting the company and its finances.
Properly approving and ratifying actions taken place in operation of the business helps a company combat any potential claims that it has not acted in accordance with the governing documents or law. Reviewing the organizational documents each December and brushing up on the terms will help a business owner in starting the New Year with a clear mind of the steps necessary to meet governance obligations during the ensuing year.