There are at least two important reasons for maintaining corporate records: to preserve a corporation’s limited liability for its stockholders and to be well-prepared for a potential investment or acquisition.
To preserve limited liability for its stockholders, a corporation at a minimum should do the following to treat the corporation as a true separate entity:
[NAME OF CORPORATION]
By: _________________________________
Name: ______________________________
Title: _______________________________
The other benefit of maintaining corporate records is that when your start-up needs capital or is looking to exit, potential investors and buyers will want to see everything and know everything about your company since its inception. By maintaining accurate corporate records, you can show potential investors and buyers a clear picture of the company’s actions and ownership. Corporate records are also required to back up the key representations and warranties the company will make in investment or sale documents and to ensure that the statements made to investors and buyers about the company are true, accurate and complete.
Poor corporate record-keeping may scare off investors and buyers, even if there are in fact no underlying risks or issues.