Posted In: Business Transactions & Corporate Counseling
By Patricia A. Gajda on May 7, 2021
How many times have you heard the old saying “if it isn’t broke, don’t fix it”? Sage advice. Perhaps. But not if you own a business. All too often a person forms his or her entity (corporation or limited liability company), fills out the documents and then never looks back. This can cause all kinds of problems for you down the road. So when it comes to your company, do not ignore it just because there has not been a problem. Perform a corporate checkup every couple of years to ensure that your company is on the right path.
It is a good idea to take a look at your organizational documents, your Articles of Incorporation or Organization and your Code of Regulations/Bylaws on a periodic basis to make sure you are running the company in accordance with the governing documents. And if not, you can revise the documents. Things do change. As we have learned during the pandemic, not all meetings can be held in person. Are you following the meeting rules set up in your organizational documents? Are the directors and officers up to date? Has someone left, retired or passed away, and the records do not reflect it and no replacement has been elected?
What about your shareholder agreement or operating agreement. Do you have one? Have new shareholders or members been added, or have others been bought out? What does the agreement provide? Does it still perform as intended? Does the agreement provide for buy-outs of shareholders or members and is it still feasible? How are the shares or units valued? Does it still work for you?
Then there are changes in the law. The corporate statute has undergone several revisions in the last few years, and the state of Ohio has just passed the new Ohio Revised Limited Liability Company Act. The old limited liability company provisions are repealed effective as of January 1, 2022, and the new law took effect as of April 12, 2021 (but it is not applicable to limited liability companies until January 1, 2022), under an entirely different chapter of the Ohio Revised Code. Are you up to date?
Take the time to review and update your governance and organizational documents now. Fix your documents before they are proven to be broken.
The attorneys at Brouse McDowell are skilled in the area of corporate law and can assist your business with its review and update of corporate governance documents and agreements. Please contact our Business Transactions & Corporate Counseling Group for more information or assistance.
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