Q: Can I replace my corporate book and corporate records as I need to sell my business?
My family started a corporation many years ago. My father, the owner, and operator of the building died suddenly and now I want to sell his business. I can’t find the white corporate book with the corporation’s corporate records which held the corporate minutes. I saw it years ago but now cannot find it.
A: You may recreate lost or destroyed corporate records.
Corporate Book Replacement
This is not an uncommon situation with small business corporations that do not have a business attorney that they work with regularly who would ordinarily keep the corporate book and corporate records.
Corporate Records Program
If your corporation was involved in a program similar to the Corporate Records Program, this would not be a problem because of the mandatory annual updating that happens to the corporate records through the program.
It is our opinion that re-creating corporate records is a much misunderstood and largely unexplored subject. The reason for this is that it involves a wide range of conduct, some of which is a natural part of everyday business life. To the layperson, re-creating corporate records may suggest wrongdoing of some type. However, the question of whether or not re-creating corporate records is right or wrong always depends upon its purpose and effect.
The problem with re-creating corporate records
The problem with re-creating records is that it describes a wide range of behavior on the part of business owners. On the one hand, you could be re-creating corporate records to commit blatant fraud. On the other hand, it can be employed in legitimate business practice as well. Whether or not a given situation of re-creating the corporate records is legitimate or improper is a complex, multifaceted question that frequently plagues the owners of small businesses.
What is the purpose of re-creating corporate records
If I were to boil this concept down to one simple principle it would be this: is the purpose of re-creating the records to merely memorialize something that actually occurred in the ordinary conduct of the business or is the corporate record being created to mislead someone into believing something occurred when in actual fact it did not.
If the records are being created simply to mislead a shareholder, director officer, or any third party who is acting in reliance on the corporate book, we would simply tell the person contemplating the re-creation not to do it. Why take the risk?
Memorializing corporate events
If you are simply attempting to memorialize the series of actions that occurred in the life of the corporation, I would first recommend that you call a meeting of the shareholders and board of directors and discuss the situation fully and openly. You should specifically discuss the issue of the lost records and your options for replacement.
Once the shareholders and directors have agreed to re-create the records for the purpose of memorializing past acts and decisions, I would further recommend that you add a corporate resolution to the corporate minutes of shareholders and minutes of the board of directors that specifically approves the re-creation of the corporate records and ratifies the previous decisions of the officers and directors of the corporation. I hope this helps.
How Do We Begin A Corporation Dissolution?
Business Law Firm Orange County, Q#13003: How do we dissolve our small business corporation now?
My wife created S corporation in 2005 for the apartment units she owns. We never filed tax returns on the corporation name but we filed it on her personal tax returns with the California Franchise Tax Board. California Secretary of State suspended our entity.
How do we dissolve the corporation now?
Business Law Firm Orange County, A#13003: Here are a few things to think about with a corporation dissolution.
In California, the dissolution of the corporation can be started by the shareholders making an “election” to dissolve the corporation. The election can be made by “written consent” of the shareholders. The election can also be made by a formal vote of the shareholders at a meeting of the shareholders.
The vote or written consent will need to be made by at least 50% of the outstanding shares of the corporation. If there were no shares issued, the board of directors could make the election.
If there were no directors elected or named in the original Articles of Incorporation, this decision could be made by a majority of the incorporators of the corporation. The incorporator or incorporators will be named in the Articles of Incorporation.
After the formal election to dissolve the corporation has been made, the corporation is required to file documents with the Secretary of State.
To dissolve, the corporation must file a Certificate of Election to Wind Up and Dissolve prior to or together with a Certificate of Dissolution. However, if the election to dissolve is made by the vote of all the outstanding shares, only the Certificate of Dissolution is required.
As soon as you have filed the Certificate of Dissolution, the Secretary of State will contact the California Franchise Tax Board to determine whether or not the corporation is current on its tax filings and payments. This is the part where it gets expensive for you.
If the corporation is current on tax filings and tax payments, the request for dissolution will be granted.
If the corporation has not made all of the necessary tax filings and is not current with its tax payments, the certificate will be rejected by the Secretary of State. The corporation will be required to file all of the late tax returns and pay the minimum franchise tax fee for each year of outstanding tax returns, including any penalties and interest that have accrued, in order to complete the dissolution.
I hope this information gives you some idea of the basic process you will need to go through to dissolve the corporation now. If you need some additional guidance on the process of dissolving a corporation, please call the Orange County Business Law Firm – The Incorporation Attorney, the Law Offices of Gale and Vallance, APC at 714-634-4838.
Can you tell me how to purchase a house using a Corporation in Orange County? I sold my property recently and I needed to go through the “short sale” process.
Use a Corporation to Buy a House
Answer: How to purchase a house using a Corporation
The process to purchase real property within a corporation in California is fairly straightforward. It is critical that you refer to the bylaws of the corporation to make sure that there are no prohibitions against purchasing real estate or restrictions as to the requirements placed upon the corporation and the corporate officers to make such a decision.
Send A Notice To The Board Of Directors
In general, the corporation would send the notice to all of the directors on the board of the corporation calling a formal meeting of the board of directors. The board of directors would make a decision as to whether or not it was in the best interests of the company to make such a purchase.
If the board resolved to make the purchase, the corporate secretary would prepare corporate minutes of the board of directors reflecting the decision and who on behalf of the corporation was empowered to make the purchase.
Most likely, the president of the corporation would then move forward with the purchase of the real property using the services of qualified realtors in the area.
Does The Corporation Have Adequate Credit?
So long as the corporation has adequate credit and the purchase makes good business sense, a financial institution will likely lend on the property.
A problem in the lending process could arise as a result of your recent short sale. If the corporation does not have adequate credit, a financial institution will require the personal guarantee of someone who does have adequate credit.
If you are the sole shareholder and have recently gone through a short sale on another piece of real property, it is most likely that your credit is not in the condition that it needs to be in order to satisfy a personal guarantee required by the bank. In this situation, you are going to be required to look to another person who is willing to act as the personal guarantor on the promissory note to the bank.
Do Not Use The Corporation To Hide An Agenda
If you are attempting to repurchase the same property you just sold using a corporation to hide the fact that it is you who is making the purchase, you are going to run into some very serious problems.
It is essential that you speak with a qualified real estate or business attorney to review all of the facts in a meeting that is protected by the attorney-client privilege so that you can understand all of the potential negative ramifications of such a plan. Be careful.
Business Lawyer Orange County, Q#13001, S Corp Minimum Franchise Taxes – Whose Responsibility?
I formed a California corporation in 2008. There was only one shareholder of the corporation. I was the sole officer, director, and resident agent for the service of the process of the corporation. I operated the corporation for six months.
Unfortunately, the business was not successful.
There was ultimately no income or outstanding debt. Furthermore, there is no business that could lead someone to consider bringing a lawsuit against the corporation. Because the whole operation seemed to go nowhere, I decided that I would not file any corporate documentation or any tax returns.
I eventually forgot all about the corporation.
However, recently I search the website for the California Secretary of State and there was a notation that the corporation had been “suspended”.
I want to dissolve the corporation but I cannot afford to pay the California Franchise Tax Board the minimum franchise tax fee of $800 per year times the four years that I have not yet paid.
Orange County Business Lawyers, A#13001, S Corp minimum Franchise Taxes -Whose Responsibility?
What will happen if I leave the corporation permanently suspended?
I believe that the state of California will ultimately revoke the status of the Corporation and it will cease to exist.
Will it continue to accumulate $800 per year forever?
Until the status of the corporation is permanently revoked, it will continue to accumulate the minimum franchise tax fee of $800.00 per year.
Am I personally liable for the taxes?
In general, you are not personally liable for the taxes of the corporation unless you sign documentation to the contrary. However, if the corporation had any assets that were distributed to the shareholders (you), I believe that the state of California may make a concerted effort to have you disgorge the money that was distributed out of the corporation before all of the debts and obligations to the state were paid.
Will I have any troubles opening a new corporation in California if I’m listed as an officer, director, or agent for service of process on the suspended corporation?
You should have no trouble opening up a new corporation in the state of California even though you are listed as an officer, director, and/or resident agent for service of process on the suspended corporation.
When it comes to small business corporations, an owner of a small business can face just as many complexities closing down the corporation as they face when starting up the corporation in the first place. It is always best practice for small business owners to consult with an Orange County Small Business Law Firm that handles these types of situations on a regular basis. If you should have any questions about how to properly close or dissolve your small business corporation, please contact the Business Lawyers Orange County– the Incorporation Attorney at (714) 634-4838.
Highly recommended!
Andy Gale & the associates at Gale and Vallance were awesome in setting up the CA Professional Nursing Corp for ARF Admin Solutions. They were very responsive and knowledgeable from the start. Highly recommended!
George
01/01/2023
Business legal services
Gale & Vallance provided excellent business legal services. The firm was professional, prompt and prepared. The entire process of starting a new corporation was easy and affordable. They have my recommendation.
Raj
07/10/2022
Highly Recommend!!!
I met Andrew Gale through a mutual friend several years go. I was so impressed with their business practice that I made it a point to get to know the attorney to expand my own business. Several years later following their advice i am successful with my business endeavors and do not make any decisions unless i consult with them. Not only do they manage my corporations but also literally help 30 of my clients who use their services. Rare gems in the industry. Highly recommend Gale and Vallance.
X
Incorporation Attorney
1820 W Orangewood Ave Ste 104a, Orange, CA, United States
This firm is excellent, efficient, reliable, with great valuable expertise and very thorough. Their dedication to providing great work and service is apparent in their kind, supportive, consistent great communication. Including providing consistent updates on new laws and regulations. Working with them and having them on my team, I have the confidence and reassurance that all services provided will be of great assistance and help to the continued positive growth and success of my corporation business along with the maintenance of keeping in compliance with and within federal state laws and regulations.
Hannah K
27/01/2024
A trusted colleague/friend of mine actually referred me to Andy's firm and I'm really grateful!
He and his team were incredibly prompt, informative, helpful, and patient (with inevitable questions that came there way by a new business owner like myself). With all the specificities it takes to create a business, this team was awesome in communicating with me and assisting me with navigating not only the needs to get the ball rolling but also how to keep it rolling and with tips to help with bank accounts and accounting packages (if I were to want to take those routes).
They were also very neutral in providing all the options possible and when I requested advisement or pros/cons, they were able to share these promptly and in a way that helped me choose what was best for me.
I'm glad to have worked with them and will continue to work with them
Courtnie L.
07/11/2023
I am so grateful for Andy Gale and his firm's help in getting my S Corp established. He has great expertise and I feel more at ease knowing everything was set up properly with their assistance!
X
Incorporation Attorney
1820 W Orangewood Ave Ste 104a, Orange, CA, United States
Andy and his team were a pleasure to work with! As an LMFT opening a private practice, I was nervous and felt like I didn't know what I was doing. Andy did a great job at explaining everything step by step. I got off of our kick-off call feeling confident and ready to take the next step to opening a practice! I decided to go with a corporation for my private practice. Andy and his team are thorough and answered all my questions throughout the process. I was surprised how quickly everything was taken care of. They also sent me emails along the way, giving me updates. I will be using them for my yearly legal needs. 10/10 recommend!
Julie Eyssallenne
12/11/2023
Andy and his team of professionals are amazing to work with. Not only are they extremely knowledgeable and professional, but they are also very friendly and easy to work with. They will always be my go-to. I appreciate Andy and his team!
Z D
12/01/2024
I could not be more pleased, and frankly impressed with the expertise, attention to detail, follow-up and professionalism of the whole office staff. Andrew Gale Esq is extremely knowledgeable of his craft. His overall approach to corporation creation and management took any doubt or apprehension I had about the process.
Thank you so much for everything and I look forward to a long relationship with your legal practice.
Zouhair Kevin Daif, FNP, Nursing P. C.
