Why does my corporation need organizational minutes?
The Delaware General Corporation Law (DGCL) provides in Section 108 in part:
(a) After the filing of the certificate of incorporation an organization meeting of the incorporator or incorporators, or of the board of directors if the initial directors were named in the certificate of incorporation, shall be held, either within or without this State, at the call of a majority of the incorporators or directors, as the case may be, for the purposes of adopting bylaws, electing directors (if the meeting is of the incorporators) to serve or hold office until the first annual meeting of stockholders or until their successors are elected and qualify, electing officers if the meeting is of the directors, doing any other or further acts to perfect the organization of the corporation, and transacting such other business as may come before the meeting.
(c) Any action permitted to be taken at the organization meeting of the incorporators or directors, as the case may be, may be taken without a meeting if each incorporator or director, where there is more than 1, or the sole incorporator or director where there is only 1, signs an instrument which states the action so taken.
The DGCL says that the organizational meeting ”shall be held”, not may be held. A corporation that has not had an organizational meeting is not properly organized under law.
The initial director(s) are either named in the Certificate of Incorporation or in a written action by the incorporator naming the initial director(s).
The organization meeting most typically occurs by way of written consent minutes rather than a physical meeting of directors.
The topics typically covered in the organizational meeting minutes are:
- Ratification of the actions of the incorporator for incorporating the corporation
- Adoption of written bylaws
- Approval of the form of stock certificate
- Fix the fiscal year
- Organize the Board of Directors by naming the Directors and officers of the Board
- Election of initial officers of the corporation
- Determining Director compensation, if any
- If the Directors or officers are to be employed by the corporation, their compensation, employment contract and other employment terms
- Issuance of stock to stockholders and recitation of the consideration received by the corporation in exchange for the stock
- Qualification to do business in other states
- Banking resolution
- Authorization to pay fees and expenses of incorporation
- Authorize the application for a taxpayer identification number
- Making a Subchapter S election
- Establishing books and records
The Organizational Minutes are placed at the front of the corporation’s minute book.
Delaware Corporate Agents, Inc., offers for sale a form of organizational minutes which you can fill in. Additionally Delaware Corporate Agents sells a selection of minute books at various price points to meet your corporation’s need to keep its records in a single place. Additionally, the minute books contain custom printed stock certificates.
