Get your client’s business launched correctly with carefully prepared directors’ organizational actions
April 24, 2014
Preparation of the resolutions for the initial organizational actions by the first directors of a new corporation is an opportunity to provide the founders with a comprehensive checklist of the most important actions that will need to be taken in order to complete formation and organization of the corporation and get them on the correct path toward effective corporate governance.
The organizational actions can be taken at a meeting (see Specialty Form at § 6:121) or can be approved by a written consent action (see Specialty Forms at §§ 6:119, 6:119.50 and 6:120). The draft of the organizational resolutions should be accompanied by a transmittal communication–letter or e-mail–that summarizes the key issues that will need to be considered (see Specialty Form at § 6:99.60).
Given the importance of the actions to be taken by the initial directors you should strongly recommend to you clients that an actual meeting be held so that we can answer any questions about the actions to be taken; however, if the directors prefer to act by written consent you should still ask them to schedule a conference call with you to go over each of the resolutions in the written consent before it is signed and becomes effective.
In any event, make sure that the directors recognize that the resolutions are a good checklist of the issues that need to be considered and the actions that need to be taken including designation of officers, issuance of shares, regulatory filings, tax elections, opening bank accounts and appointment of outside legal counsel and accountants for the corporation.
In addition, many of the resolutions will refer to, and incorporate by reference, other important documents that you will be providing to the clients. For example, the issuance of shares to the founders and their appointment to various positions on the management team will actually be covered by stock purchase agreements, which will include vesting provisions and restrictions on transfer of their shares, and one or more employment-related agreements that include conditions on protection of confidential information and assignment of inventions.
Further details regarding the procedures for formation and organization of new general business corporations are available at §§ 6:1 et seq.