Corporate minutes scam
Over the past few weeks, several businesses in Arkansas have received solicitations in the mail requesting that the business pay a service to keep them in compliance with an “Annual Minutes Requirement Statement”. On November 5, Attorney General Dustin McDaniel released on his website information regarding the solicitations, confirming that it was a scam. After a simple Google search, this same scam appears to be present in several states around the country.
Arkansas law does require corporations to maintain minutes of the meetings of owners and board of directors. But, as noted in the Attorney General’s release, these minutes are not required to be filed with the State.
Best practice is for owners and directors to meet at least annually in order to satisfy their obligations as those charged with governance of the entity. Topics to cover at such meetings can include (but are not limited to):
- Elect corporate officers
- Review and analyze financial results
- Approve corporate borrowing or debt financing
- Approve incentive compensation plans
- Review employer-sponsored retirement plans and performance
- Retain independent auditors, and approve audit reports or tax returns prepared by external CPA’s
- Discuss status of pending or threatened litigation
Minutes should be signed by the Secretary and Chairman and evidence all members present, and the original signed minutes should be stored in a safe place with other corporate records.
Minutes are required to be kept by all corporations, whether they are $1 billion businesses with 20 board members, or a small S-corporation with one shareholder. In the event of an IRS exam, one of the items the IRS will most likely request to review is the company’s meeting minutes for the year under exam.
A copy of the Attorney General’s announcement can be found on his webpage here.