The process of incorporating a company is full of formalities – from filing the Articles of Incorporation to drafting the initial corporate minutes, and everything in between. However, once your corporation is up and running, that doesn’t mean you can forget about corporate formalities completely. In fact, failure to comply with some minimum requirements may subject your corporation’s shareholders to “alter-ego” liability – meaning they could be personally liable for the company’s debts. With this in mind, corporations should take the following minimum steps to ensure that the company is in compliance with California law.

First, every corporation must hold an annual meeting of shareholders (which can typically be conducted through the written consent of the shareholders in lieu of an actual meeting) in order to elect the corporation’s directors. The contents of this meeting should be reflected in the form of corporate minutes. Second, corporations doing business in California must pay an annual $800 minimum franchise tax. This is true even if the corporation is inactive or operating at a loss. Third, California law requires corporations to update the records of the California Secretary of State on an annual basis by filing a Statement of Information. Finally, depending on the activities of the corporation and the industry in which it operates, there may be additional corporate compliance requirements.

Although seemingly easy to comply with, these minimum requirements are often neglected – putting the corporation and its shareholders in a precarious position. If you need assistance ensuring that your corporation is in compliance with California law, or if you have other questions regarding your corporation, contact the experienced attorneys at Navigato & Battin.