I have a very small corporation. Do I really have to hold regular meetings of shareholders and directors and keep minutes of those meetings?

Yes. Holding regular shareholders’ and directors’ meetings and keeping good minutes of those meetings is one of the easiest things you can do to insure that a court will respect your decision to incorporate your business and not hold you and your partners personally liable for the corporation’s obligations. Corporations are generally required by law to hold at least one annual meeting of shareholders every year to elect directors. Corporations are also affirmatively required to keep records of meetings of shareholders and directors. More importantly, one of the factors many courts cite in deciding whether to “pierce the corporate veil” and hold shareholders personally liable for what were intended to be corporate obligations is the failure to maintain minutes and other corporate records. We’ve read cases in which courts refused to pierce the corporate veil even though the corporation was undercapitalized, where, among other things, the corporation held a number of meetings and kept separate minutes of those meetings. Conversely, we know of another case in which corporate principals were held personally liable for a corporate debt in excess of $4.5 million, where the principals elected not to memorialize even the most significant events in the corporation’s history in the minutes. The lesson is simple: take the time needed to hold a meeting once in a while, and keep good minutes of those meetings, and your chances of being held personally liable for your corporation’s debts are significantly decreased. For more information, read our articles on Avoiding Alter Ego Liability with Proper Corporate Minutes and Reducing Risk of Alter Ego with Some Simple Things.