The Official Corporate Minute Book Scam
Posted: Wednesday, May 07, 2008
by Jon Fischer
http://www.weblawresources.com
There are loads of companies out there whose primary business is to sell official corporate minute books. These "official kits" usually include a corporate binder, a corporate seal, official share certificates, stock ledger and some organization dividers. There is a whole business built around the perception that these "official company record books" are required by all corporations and limited liability companies.
True, it is highly recommended that every company have a central book where they keep all of their corporate documents. If you have a corporation or limited liability company, you should keep a spiral notebook where you place your Articles of Incorporations, Bylaws, organizational minutes electing your board of directors and officers, information regarding your application for an employer identification number and small business tax election if applicable. Your corporate books should also include records of ock ownership.
Even though a central location book should be used to keep all of this information in central place, there is no requirement that you use one of the overpriced "official corporate record books" that are sold by many companies. What is important is that you have a central place for your records, the appropriate documentation in one place in case you are ever called upon to prove your corporate existence and keep your records appropriately updated and current.
The same is true of the official "corporate seal." Corporate seals have some historic significance, but they are rarely used in modern times. Instead, corporate laws permit officer signatures to "seal" corporate documents. In fact, the signature of the officers is always required and the corporate seal has become mere window dressing. Yet, there are several companies out there that offer corporate seals for sale and do a lot of business based upon the false perception that every corporation and LLC is required to have one. In reality, companies who purchase these corporate seals are being misled. They will do nothing more than take up space in a file drawer and you will never use them after you purchase them.
I can tell you from first hand experience having practiced law for 20 years that I have never run into a situation where a corporate seal was required. So don't be deceived into thinking that you need these items. Instead, invest in the appropriate state-specific documentation that you need to maintain and keep up to date and make certain that these documents are signed and kept current in a central place. A ring notebook that you can find at any office supply store will suffice just fine for your "official corporate book."
Do not be fooled into spending your hard earned money on useless window dressing.
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Top-level comments on this article: (4 total)Good article. Caveat emptor! Let the buyer beware. Sometimes that three-ringed inder can contain more weightier information than that expensive minutes and record book with the overpriced binding and embossed corporate seal. It's all a matter of perception. Don't get confused by all the smoke and mirror antics parading as corporate legality. Investiagte before you invest.
Good information. Thank you.
Good information. Though I agree that these companies are preying on small business owners, however, your message can be misleading because some states do have a statutory requirement for corporations to maintain their incorporation documents and annual minutes together. Whether that be in an inexpensive 3-ring binder or electronically is up to the corporation, but it IS statutorily required.
Since I just started my business I was wondering what these corporate minute books are and why I would need such a thing. Now I know I don'tand I can head off to the store to get a good basic binder!
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