| And have your shareholders shouldering the liability for | | | | According to the laws, it is compulsory for the |
| debts and other obligations. | | | | corporation to hold regular annual meetings of its |
| If you are a businessperson, it is very important to | | | | shareholders and regular annual meetings of its Board |
| have a solid corporate structure in order that your | | | | of Directors. These meetings may become actual |
| business' shareholders assets are protected well | | | | meetings wherein the quorum required is met, they can |
| enough from the corporations' debts and other liabilities. | | | | also be held based "on paper", or the "Unanimous |
| This situation is possible if your corporation is being | | | | Written Consent in Lieu of Meeting" is drafted and |
| treated as a different or separate entity from its | | | | enforced on all persons who should be present for |
| owners. It should also observe the formalities of | | | | that particular meeting. |
| corporate ethics as required by the laws governing it. | | | | Moreover, any kind of extraordinary transactions need |
| A distinction must be solidly set between the owners | | | | to be clearly documented through a shareholders or |
| or shareholders of the business and the corporation, | | | | directors' "Special Meeting." In every time these |
| otherwise a creditor in pursuit of the payments for | | | | meetings have taken place, the written consents or |
| debts and obligations may be able to ignore the whole | | | | minutes of the proceedings need to be transcribed on |
| entity of the corporation and rather go after the | | | | its appropriate place in your company's corporate |
| assets of individual shareholders. | | | | book. It should be continuously maintained as long as |
| If your corporation start facing this kind of pursuit from | | | | the corporation exists.o Shareholders of the |
| creditors, then it can be considered that, your | | | | corporation must invest sufficient amounts of capital |
| corporate veil has been disregarded or pierced. Upon | | | | depending on the nature of the business. They must |
| the occurrence of this, your shareholders become | | | | not just lend the company with their money. |
| personally liable for the debts and other obligations | | | | If ever a court finds out that the company has no |
| being sought by creditors. | | | | sufficient capital to operate, it may permit the creditor |
| Consequently, the law will then impose the liability | | | | to look into the company and hold its owners liable for |
| against the corporation's shareholders instead of the | | | | the debts and obligations made by the company. |
| corporation itself since their entities were not | | | | Remember, the courts have long established that |
| established separately. The personal liability that is | | | | companies with inadequate capitalization fund may be |
| imposed against the shareholders would have a likely | | | | considered as "shams."o Maintain your corporation's |
| undesirable result on their personalities, though. | | | | identity separate from you and other owners or |
| In order for your business to avoid this inconvenience | | | | shareholders. Do not use the assets of your |
| and the undesirable outcome from it, here are the | | | | corporation, as they are the same assets as yours or |
| following things to keep in mind, according to the | | | | execute documents indicating yourself as a |
| general principles of the corporate laws:o Preserve | | | | corporation officer. Avoid placing the income of the |
| your company's corporate records in strictly | | | | corporation into its account. Do not mingle the |
| professional manner. If you are incorporated in | | | | shareholders' assets with that of the corporation's |
| California, then make sure that the way your significant | | | | assets. Always use the company's full name including |
| corporate records are kept in compliance with the | | | | the "Inc."o File the corporation's tax returns as required |
| state of California Corporation's Code. | | | | by the Federal and state governments. Your |
| If you fail to comply strictly with these codes, chances | | | | corporate attorney can help you also in completing the |
| are if your case goes to trial, the courts may be given | | | | Secretary of State's form that need to be filled up |
| a major reason to consider whether your corporate | | | | with information then mailed in, called the "Statement of |
| veil could be pierced. | | | | Information. |