Failure to follow corporate formalities may expose corporate officers, directors and shareholders to personal liability. Maintaining good records, including corporate minutes, on a timely basis goes a long way toward maintaining the limited liability benefit of a corporation.

If incorporating was your first step to a new and safe way to do business, compliance with the law is the easiest way to keep you safe from any liability associated with they way you manage your company.

There are many reasons to pay attention to the formalities associated with running a corporation: Business corporation laws require articles of incorporation and bylaws and specify other things that must occur.

Articles of incorporation and bylaws form a contract between the corporation and its shareholders, obligating the corporation to act in accordance with the articles and bylaws.

Directors and officers owe the corporation and shareholders a fiduciary duty to use good faith, exercise due care, and act in the best interests of the corporation. Majority shareholders must act in good faith, in a manner not calculated to oppress the rights of minority shareholders.

Corporate formality must be respected and observed to preserve the integrity of the corporation and to shield officers, directors, and shareholders or related businesses from personal liability.

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