Two separate but related questions for the experts:
1. I started a corporation 4 years ago. I didn't think I had the money to hire an attorney, so I had an accountant form the corporation. My niece (who's a law student) told me yesterday that I'm supposed to have held annual meetings of shareholders, and also have meetings and minutes whenever the corporation made a big decision. Is it illegal for me to draft those minutes now, and backdate them as though I had done them when I was supposed to?
2. My accountant has offered to draft the meeting minutes for me (at a charge, of course). He also offered to draft my bylaws, since I don't have any yet. My niece told me that my accountant's doing so would be "unauthorized practice of law." True?
The lack of Minutes is often cited by courts as one factor in deciding to “pierce the corporate veil,” imposing liability for a corporate debt on its shareholders. Therefore, attorneys always labor the point that you need to have Minutes. However, a majority of the "veil piercing" cases turn on much more egregious factors (i.e. disregard of the corporate entity, unjust enrichment of the shareholder, commingling of corporate and personal funds, and/or failure to carry adequate liability insurance. If you have kept good financial records, not commingled funds with the corporation, and maintained adequate liability insurance, it is unlikely that a lack of Minutes would enable the corporate veil to be pierced.
Having said that, Minutes would offer you additional protection. Look through your records for any evidence of important corporate decision-making. Also, if you actually had meetings and can remember what transpired in those meetings, you can prepare Minutes “nunc pro tunc”, meaning “now for then.” You should not backdate Minutes "nunc pro tunc", but should instead show the Minutes as prepared on the current date for a meeting held on a prior date. Going forward, plan to have annual meetings of the Board at least once a year (which you may even wish to incorporate with a year-end tax planning meeting with your tax lawyer).
Is your accountant the registered agent of the corporation? If so, it is unlikely that there would be any concerns regarding unauthorized practice of law.
1. There is nothing illegal about bringing your paperwork up to date on the facts you state.
2. It is a close call whether a CPA can prepare minutes and bylaws. To be careful, if I were a CPA I wouldn't. By the way, no one gives more advice than law students. Much is correct, much is incorrect, and some is unauthorized practice of law.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
I tell my clients to do their minutes - they can put the date drafted and the date when events took place. Yes, I hate when accountants get into doing legal work and will agree with your niece.
I agree with attorney Doland and will add the following:
Given that your accountant didn't know enough to tell you about meetings and minutes from the beginning, why would you even consider asking that individual to consider doing your legal work in the future?
This information does not constitute legal advice and does not establish an attorney-client relationship.