While the failure to file the required Annual Report with the Division of Corporations will lead to administrative dissolution of the corporation, failure to keep at least Annual Minutes is a little less cut and dried. Annual Minutes are not required to be filed with the Division of Corporations. There is no penalty for failure to complete and maintain Annual Minutes.
Yet there is every reason to document corporate action in the form of minutes which should be maintained by the corporation. Creditors will always seek to attach individual liability for debts to shareholders.
If corporate formalities, such as completing your Organizational Minutes and keeping regular Minutes of Meetings, have not been followed then you have created a red flag. Though Florida Corporate law requires that there be some fraud in forming the corporation or actions by individual shareholders to defraud creditors through the corporation, if you do not follow corporate formalities, chances are allegations of fraud in running the corporation as your personal piggy bank won’t be far behind.
In addition, failure to properly document loans made to the corporation could result in the IRS re-characterizing loans as capital contributions greatly changing your tax liability for capital gains should you seek to later sell your company.
The great thing about Annual Minutes is you can address all actions taken for which you did not have separate meetings. Here is a checklist of certain items, though not exhaustive, that should make it to your Corporate Minute Book:
1. Election of Directors and appointment of officers
2. Review of corporate financial statements
3. Changes in salaries of officers
4. Changes in compensation of managerial level corporate employees
5. Amendment of Articles of Incorporation
6. Adoption of employee benefit plans
7. Purchase, sale, or lease of real property or equipment
8. Approval of corporate loans taken or made
9. Authorizing additional stock or approving the issuance of authorized stock
10. Indemnification of Directors, officers, employees or agents