Running a business comes with a lot of responsibilities, and one of the most important—yet often overlooked—duties is maintaining corporate records. What exactly are corporate records, and why should your Corporation or Limited Liability Company be diligent in preparing them?

Simply put, corporate records are official documents that keep track of key decisions and important information about your company. Think of them as your business’s “paper trail.” Some examples of corporate records include:

• Articles of Incorporation: The legal document that establishes your company.
• Bylaws: The rules that dictate how your company is run.
• Meeting Minutes: Written notes from board meetings or shareholder meetings.
• Corporate Resolutions: Formal decisions made by the board of directors.
• Stock Certificates: Documents showing who owns shares in the company.
• Accounting Records: Accounting records are documentation that establish asset ownership and liabilities, and assist with auditing financial statements.

These sorts of corporate books and records are legally required in Florida, Delaware, and throughout the United States.

A corporate resolution is a formal document that records a decision made by the board of directors or shareholders of a company. These resolutions are essential for documenting major business decisions and ensuring they are properly authorized. Once passed, they become part of your company’s official records and may be required for legal purposes, compliance, or even by financial institutions.

Corporate resolutions can cover a wide range of actions, from appointing officers to authorizing major financial transactions. The key distinction is who has the authority to approve them—some actions require shareholder approval, while others are handled solely by the board of directors.

Corporate resolutions are a key part of your company’s legal and operational structure. They are formal decisions made by either your board of directors or shareholders on significant business matters. Understanding the difference between resolutions that need shareholder approval versus those that only require the board of directors' approval can help you navigate important corporate decisions smoothly.

Here are a few common examples of corporate resolutions and who typically approves them:

1.     Sale or Issuance of Shares of the Company
When a company decides to issue new shares or sell existing shares, a corporate resolution is often required.

2.     Change or Removal of Directors or Officers
Appointing, changing, or removing members of the board of directors or company officers often requires a formal resolution.

3.     Approval of Major Financial Transactions (Loans or Acquisitions)
If your company plans to take out a large loan, enter into a merger, or acquire another business, a formal resolution is usually needed to authorize the transaction.

4.     Amendments to Bylaws
Changing the rules that govern how your company operates requires careful consideration and a formal resolution.

5.     Declaration of Dividends
If your company is ready to distribute profits to its shareholders in the form of dividends, a resolution is required to declare and authorize the payments.

6.     Change of Business Name or Registered Address
If your company wants to change its name or its official registered address, a corporate resolution is necessary to document the decision.

Understanding whether a resolution needs the approval of the board of directors or shareholders depends on the nature of the decision, your company’s bylaws, and the jurisdiction where the business is situated.

• Board of Directors Approval: The board is responsible for the day-to-day management and strategic decisions of the company. Resolutions related to internal operations, such as hiring officers (e.g. CEO’s, President, Vice-President), authorizing loans, or declaring dividends, are typically approved by the board.
• Shareholder Approval: Shareholders, as the company’s owners, have the right to vote on major decisions that could impact ownership, structure, or significant changes in the company’s direction. This includes actions like the sale of a large percentage of the company, amendments to bylaws, or changes to the board of directors.

(1) A corporation shall maintain the following records:

(a) Its articles of incorporation, as currently in effect;

(b) Any notices to shareholders referred to in s. 607.0120(11)(d) specifying facts on which a filed document is dependent, if such facts are not included in the articles of incorporation or otherwise available as specified in s. 607.0120(11)(d);

(c) Its bylaws, as currently in effect;

(d) All written communications within the past 3 years to shareholders generally or to shareholders of a class or series;

(e) Minutes of all meetings of, and records of all actions taken without a meeting by, its shareholders, its board of directors, and any board committees established under s. 607.0825;

(f) A list of the names and business street addresses of its current directors and officers; and

(g) Its most recent annual report delivered to the department under s. 607.1622.

(2) A corporation shall maintain all annual financial statements prepared for the corporation for its last 3 fiscal years, or such shorter period of existence, and any audit or other reports with respect to such financial statements.

(3) A corporation shall maintain accounting records in a form that permits preparation of its financial statements.

(4) A corporation shall maintain a record of its current shareholders in alphabetical order by class or series of shares showing the address of, and the number and class or series of shares held by, each shareholder. This subsection does not require the corporation to include the electronic mail address or other electronic contact information of a shareholder in such record.

(5) A corporation shall maintain the records specified in this section in a manner so that they may be available for inspection within a reasonable time.

Shareholders are entitled to inspect Corporate Records under State laws (e.g. Florida Business Corporation Act and the Delaware General Corporation Law) including meeting minutes, corporate resolutions, and financial statements.

In Florida, Fla.Stat §607.1602 outlines the procedures shareholders must follow to request access to corporate records. Shareholders are entitled to inspect and copy certain documents if they provide written notice at least five business days in advance of their intention to inspect corporate records. However, the right to inspect records is contingent upon the shareholder stating their purpose with reasonable particularity. This means that shareholders must articulate a credible basis for their request, typically related to concerns about potential wrongdoing or mismanagement within the company.

In Delaware, Section 220 of the General Corporation Law similarly permits shareholders to access corporate books and records for a "proper purpose." This often involves investigating suspected fiduciary breaches or mismanagement. The Delaware courts have emphasized that shareholders must demonstrate a credible basis for their concerns, which allows them to access only those records that are "necessary or essential" to their investigation. Recent rulings have expanded the scope of what constitutes necessary records, allowing access to informal materials, such as emails, if they are relevant to the allegations made.

Corporate records are imperative to maintain when you understand that there is a legal concept that allows courts to “pierce the corporate veil” of a company. This concept can hold shareholders personally liable for a company's debts and obligations by bypassing the limited liability afforded to limited liability companies and corporations.

This sort of situation would defeat the purpose of incorporating a company in the first place. A court may pierce the corporate veil of a legal entity when a company is found to be a mere “alter ego” of its owners. This may occur when there is a lack of separation between personal and business finances (e.g. commingling funds in bank accounts) or the company fails to adhere to corporate formalities (e.g. maintain corporate records).

Understanding the implications of potential “piercing of the corporate veil” is imperative for business owners that want to maintain limited liability protection and ensure that their personal assets remain secure from business liabilities.

Maintaining your business’s corporate records is far more than just a formality—it’s crucial for safeguarding the limited liability of your company and protecting your personal assets as a business owner. Whether your business operates in Florida, Delaware, or anywhere else in the U.S., keeping accurate and comprehensive records helps shield your company from the risk of “piercing the corporate veil,” where courts could hold you personally liable for business debts.

Additionally, by maintaining proper records, you can anticipate and respond effectively to shareholder demands to inspect these documents. Having well-organized and up-to-date records not only ensures compliance with State laws but also strengthens the company’s position in addressing any concerns or challenges from the entity’s shareholders.