Stakeholders Matter, but Shareholders Still #1
This post about corporate stakeholders is based largely on my answer to a Quora question. Please see How many companies do you think will adopt the Business Roundtable’s statement that the purpose of a corporation is to take into account ALL stakeholders
The Business Roundtable describes itself as an association of chief executive officers of America’s leading companies. On August 19, 2019, the Roundtable garnered headlines when it announced that it had redefined the purpose of a corporation to promote an economy that serves all Americans. In my opinion, that characterization is not accurate.
Roundtable Statement about Stakeholders…
Here is what the relevant portion of the Roundtable’s Statement on the Purpose of a Corporation says:
(more…)What is a Unanimous Written Consent?
The FreeBSD Foundation – Unanimous Written Consent of Directors
This post explains what a Unanimous Written Consent is. (Sometimes it is called an Action by Unanimous Written Consent.)
The term Unanimous Written Consent typically is used in the context of a corporation, which is the focus of this post. However, it can pertain to limited liability companies and other types of legal entities, as well. (more…)
Compliance Services Joins Hall of Shame
If you form a corporation, the Postal Service soon will inundate you with official-looking forms from companies offering to create or file corporate documents on your behalf. Earlier this week I rescued a client from one of these unnecessary companies, Compliance Services.
When Should We Have our First Annual Meeting of Shareholders?
Having read Annual Meetings: The Basics, a fan of this blog asked the following question: When must we hold our first annual shareholder meeting?
The answer is stated by implication, rather than directly, in applicable statutes (which depend on the state of incorporation).
California Corporations Code Section 600(c) says, in relevant part:
So how important is this legal stuff, anyway?
Two recently-acquired clients had similar situations that brought up the importance of complying with legal requirements.
Each company is a multi-founder startup where one founder became non-productive, and even somewhat detrimental to the business. The other founders wanted to move the problem founder off to the side, where he could cause no more trouble, in a manner that would be fair to everyone involved.
Unfortunately, each company had failed to comply with some of the most basic legal requirements: Holding annual shareholder meetings to elect directors, annual board of director meetings to appoint officers, etc. As a result, in each instance we had to spend time and money taking corporate actions, and recording those actions appropriately in meeting minutes, before the real problem could be solved.
