
Ask HN: How do you manage corporate formalities for your companies? - federiconitidi
Hope everyone is having a good weekend. The title says it all – how do you guys manage formalities (e.g. minutes for BoDs&#x2F;shareholders meetings, resolutions, annual reports, etc) for your corporation?
In my previous company (sold 2 months ago) I took care of the legal formalities, however I whished I had a little more support&#x2F; guidance to make sure our processes were compliant (our accountants were mostly focused on tax filings and didn’t have their support on this). We didn&#x27;t use Clerky ourselves, I believe they may be taking care of this with one of their packages. Curious to hear what others founders think of this subject&#x2F; how you guys handle this
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eldavido
I'm on three boards. They couldn't be more different.

One is the BoD of an Oakland Chinatown condo association. It's a large
building (348 units). The board has eight members. Three American-born
tech/finance people in our mid-30s, an architect from mainland China in his
30s, a retired Cantonese nurse in her 90s, and three Cantonese small business
owners -- restauranteur, real estate, and travel agency owner.

This group is very paper-oriented, largely because the level of computer
literacy is extremely low (the RE guy flatly refuses to use email). Secretary
takes all the meeting minutes. We keep a paper minute book in the HOA
management office with the full corporate records in it going back 40+ years.
We don't have annual reports, but are required to send annual "disclosures"
with a statutorily-required list of items, which I wrote with some help from
our attorney last year.

Legally, the entity is a nonprofit corporation. Condo associations (us) are
subject to pretty intense regulation in California (google "Davis-Stirling" if
you want to know more): specific deadlines for member communication, notice
requirements for meetings, properly-formed budget disclosures, and an annual
"disclosure" package with about 30 required items in it (reserve study,
budget, mailing address of management, exact amount of assessments, etc) This
board has real diversity across age, language, and culture, which reinforced
the value of civility and following procedure. In the past, the group approved
major maintenance projects verbally, which caused a ton of fighting when
people wasn't sure what course of action had been decided. I found using more
formality, things like writing resolutions in advance (rather than scribbling
them on paper during the meeting) really helped lower the temperature of our
meetings (less yelling and suspicion), and foster an environment of trust. One
of the (previous) members had served on the board of a US public company,
which was a hell of an education, though honestly he was kind of an asshole.
That's a different story, though ;)

We keep our official notes in a paper minute book. The secretary signs the
notes after each meeting and the minutes of the last meeting are always
approved by motion in a subsequent meeting. We use Confluence as a
collaboration and drafting platform for things (e.g. infrastructure
resolutions, where we decide which project to do), which actually works quite
well, though only the young people use it. A wiki is a really excellent tool
for drafting the language of legal text with help from other members.

My second company is a holding company. It's an LLC (partnership) with three
members. We decided to go "full tech" on this, our minute book is hosted in
git, all the notes are in plaintext markdown, we approve meeting minutes using
tags, etc. Most of our formal documents are in Mac pages / PDF format and we
have a folder called "docs" where they're kept, alongside the "meeting-
minutes" folder which holds agendas, official record of the meetings, the text
of resolutions considered/passed, etc.

I also have a California corporation (S) I used for a consulting company with
employees. I've had this a while now (5+ years) so will probably use this to
manage the holding company's assets. It's just me currently so not as formal,
though I do keep a record of major decisions and actions.

Email if you have any questions, I'm happy to discuss this.

~~~
federiconitidi
Wow, quite a variety of situations! I love especially the contract between the
condo case (old school, more formal) and the holding LLC (git-based, super
tech & lean). How are you keeping track of other necessary “formalities” such
as filing officers with Secretary of State, renewing licenses, maintaining the
stock ledger etc?

I was doing everything by hand (word docs + dropbox) for my company (Delaware
C corp, <10 people) but I asked myself many time: am I missing some deadline?
Am I not documenting something important? - if you see what I mean… So I was
wondering if others use any tool to help with this, aside attorney help. I
know Clerky is great but we didn’t use it for incorporation and I didn’t have
access to it for the company mgmt..

~~~
eldavido
There really isn't as much stuff as you'd think.

For the condo association, it's a California nonprofit so we just need to file
a statement of information annually. We get a postcard reminding us to do
this. We have to file taxes, but if you have an accountant, they should ask
you to do this (since typically they get paid for completing your return). Our
attorney (specialist condo law attorney) also has been really helpful.

For the holding company, we also need to file an SI, but it's an LLC so a lot
more lightweight (e.g. no annual report). You just do it when you have to, I
think once every two years (don't quote me on this). No annual report. There's
also no share ledger. We just have an operating agreement spelling out
peoples' ownership. So, statement of info (California) and two tax returns
annually (federal and state). When we get to quarterly the accountants will
help.

In general I think the common answer to this is to get help from an accountant
and attorney. My accountant charges about 500-700 for a full set of returns,
which isn't bad. If you can't afford that, just buy liability insurance and do
business under your own name (schedule C) rather than having the bother of a
full corporation. I would never go the delaware C route unless it was pretty
clear I was going to fundraise...not worth the hassle.

~~~
federiconitidi
I see, thanks for the detailed breakdown. Condo/ LLC are definitely a little
more lightweight vs. a C Corp.

But even managing a C Corp is not that bad at the end of the day. You can do
it yourself if you know what you are supposed to do and by when. That's the
point where I got stuck with my previous company - I didn't have much guidance
and missed some pieces here and there. I'd be curious to see if others had my
same problem/ if there are nice, lightweight software for guiding small
businesses in their legal entity mannagement/ due dates etc. I found something
but looks from the '90s...

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walshemj
Which country are you in and if your listed there should be guide lines on
standing orders etc.

For running meetings in the UK you can use Citrine and I suspect the USA would
use Roberts Rules.

~~~
federiconitidi
The company was a Delaware C corp. You're right, I found some guidelines on
how do document meetings minutes and followed those. Just wondering if people
were using any other tool/service given to keep compliance, given that
formalities extend beyond shareholders/BoD meetings (think about stock ledger,
filing officers with Secretary of State, renewing licenses, etc)

~~~
eldavido
I've had little difficulty with any of this.

Clerky seems to be the standard for tech co incorporation, I know a few
that've used this, it works fine.

I've worked at places using Carta for stock, it works. I think it's good to
get out in front of this problem (tracking share issuance) with software.

For the filings, they aren't hard, just set a few reminders on your calendar
and do it.

One thing I think merits mention, early-stage tech companies have rather
unique problems other types of businesses don't have. I think that's why a lot
of the general advice on this stuff might not apply. e.g. I bet less than
0.01% of all incorporated entities issue share options. So a lot of the
general advice online might not apply.

~~~
federiconitidi
Thanks! True, some needs are probably tech-cos specific. Having said that, I
guess I wished I had back then some more guidance on keeping compliance,
remember due dates, rnew licenses etc. Like a Marie Kondo for basic legal
entity management if you see what I mean.

Clerky probably does this but we didn't use it for incorporation and it wasn't
easy to migrate.

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nolyna
Do not by past those official chain

~~~
federiconitidi
what do you mean?

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nolyna
I mean,

The corporate entity should have it’s own banking accounts (to include
checking, lines of credit, etc.). Not keeping these funds separate, also known
as “commingling,” can lead to increased scrutiny and potentially serious
liability in the event of audit by the IRS with the endangerment of personal
assets. It is a best practices procedure not to commingle funds. Meetings of
the Board of Directors’ must be held at least annually, usually following
closely behind Shareholder meetings (also known as “Special Meetings”). All 50
states mandate a meeting being held at least once a year.These annual meetings
should be used to approve transactions entered into by the Corporation.In lieu
of attendance by any given Director, written consent must be provided by said
Director (either in the form of a waiver in the absence of proper notice, or
in the form of a proxy vote given proper notice) for any decisions made at
these meetings.Meetings of the Shareholders, also known as “Special Meetings”
can be held at any time.The Corporation’s Secretary is responsible for giving
proper legal notice of these meetings, and for maintaining the necessary
waivers, proxies, minutes, etc.

~~~
federiconitidi
Now I understand what you mean, thanks. Are you aware of any tool
(lightweight, like a few bucks a month) that can guide/remind you of what you
have to do to keep formalities in place? Not just Bod/Shareholders meetings
but also things like annual filings, licenses, registered agent, etc

