You may use this website to prepare the initial resolutions required by a newly formed corporation. You may do so as the last step in our 7-Step process; or they are provided as part of our "Complete Package."

Corporate resolutions will be named as either minutes of first board meeting, or action by written consent, depending on the method you choose. Keep reading to learn more about this.

An actual board meeting is when the board members meet and vote upon the resolutions to be made. Unanimous agreement among the board members is not required to pass a resolution. A document called Minutes of the First Board Meeting is generated, which only needs to be signed by the secretary of the corporation.

If the board takes action by written consent, there is no actual meeting and there is no voting. Instead, UNANIMOUS agreement among all the board members is required to pass a resolution. A document called Action By Unanimous Written Consent is generated, which must be signed by ALL the board members of the corporation.

The functionality of each method depends upon the ability of all the board members to meet, and whether or not all the board members are in agreement about all the issues required to complete the formation of the corporation.

If you are the only director of your corporation, it makes most sense for you to take action by unanimous written consent.

When the incorporator adopts bylaws, the bylaws set forth the manner for calling board meetings and giving notice of those meetings. The directors must follow these procedures for calling and noticing the meeting, which procedures will allow all the directors to learn of when and where the first meeting will take place.

CALLING THE MEETING
California Corporations Code section 307(a)(1) states that meetings of the board may be called by the chairperson of the board or the president or any vice president or the secretary or any two directors. This does not need to be in writing.

GIVING NOTICE OF THE MEETING
After calling the meeting, notice of the meeting must be given to each director pursuant to the corporation's articles or bylaws, except as explained below.

WAIVING NOTICE OF THE MEETING
As an alternative to giving notice, directors may sign a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof. Pursuant to California Corporations Code section 307(a)(3), notice of a meeting need not be given to any director who signs such a document, whether before or after the meeting.

You can quickly and easily prepare a Waiver of Notice of First Board Meeting by using the .

No. However, a quorum of the board must attend in order to have a meeting and transact business. A quorum is a majority of the authorized number of directors of the board, unless the articles or bylaws provide otherwise. However, by law, the articles or bylaws cannot provide that a quorum shall be less than one-third the authorized number of directors or less than two, whichever is larger, unless the authorized number of directors is one, in which case one director constitutes a quorum. See California Corporations Code section 307(a)(7).

An agent for service of process is a person designated by the corporation to accept the delivery of legal papers for a lawsuit. If you are preparing minutes for the first board meeting, you should have already filed articles of incorporation with the California Secretary of State. THE AGENT FOR SERVICE OF PROCESS IS IDENTIFIED IN THE ARTICLES OF INCORPORATION.

The agent initially designated in the Articles of Incorporation may be changed at a later time. This can be done by filing an updated Statement of Information with the Secretary of State. In either case, approval from a proposed agent should be obtained prior to designation.

The bylaws were either adopted by the board of directors or by an incorporator. More often than not, an incorporator is used. If the board adopted the bylaws, then they should know. If an incorporator adopted the bylaws, there should already be a document called "Action By Incorporator" among the corporate records.

A fiscal year is a company's accounting year and does not need to correspond to a calendar year. The board should decide the corporation's fiscal year by choosing the last month of the fiscal year. Although this decision does not absolutely need to be decided during the first meeting of the board, it is a good idea to decide this matter as soon as possible.

In deciding the corporation's fiscal year, the board should consult an accountant or tax professional. Tax and regulatory compliance issues will be affected by this decision. Also, if the corporation will elect "S" status, the fiscal year must end on December 31, unless permission from the commissioner is obtained. For these reasons, a tax professional should be consulted.

The banking resolution is required in order to open a bank account. The board of directors must decide which officers are allowed to handle banking matters, and that decision should be written down in the form of a resolution. Therefore, when you prepare your minutes of first board meeting, you should inlcude the information necessary to prepare the banking resolution.

The board must make a resolution authorizing the issuance of the corporation's shares. The authorization must include the following specific information so that the officers will know what to do after the meeting:

1. Who the shareholders will be
2. How many shares each shareholders will purchase
3. How much each share costs (each share costs the same no matter who buys it).
4. The total each shareholder will pay to the corporation for his/her shares (known as "consideration")

To determine a shareholder's consideration, you multiply the cost of one share by the number of shares being purchased by that shareholder. Alternativey, if you are not sure how to determine the price per share, but you know how much money each shareholder will be "putting-in" to the corporation, you may work backwards. For example, if a shareholder will pay $1000.00 and will get 100,000 shares, each share will cost 1 cent. Everyone must pay the same price per share.

Issuing shares has many tax and securities implications. You should read more about issuing shares in the free proposed agenda and consult with profesionals regarding your situation.

The board should discuss whether the corporation's capitalization structure is intended to qualify for Internal Revenue Code Section 1244. The basic concept of section 1244 is to provide original shareholders the opportunity to treat as ordinary loss, instead of capital loss, an investment that is lost in a new small business.

THE TAX CONSEQUENCES OF THIS DECISION COULD BE SIGNIFICANT. THEREFORE, THE BOARD, AND THE SHAREHOLDERS, SHOULD ALL CONSULT AN ACCOUNTANT OR OTHER TAX PROFESSIONAL REGARDING THIS MATTER.

To help you discuss the matter with a tax professional, keep in mind the definition of "Section 1244 Stock." As defined in IRC section 1244(c), "section 1244 stock" is stock in a domestic corporation if:

1. At the time the stock is issued, the corporation must be a small business corporation (defined below).
2. Such stock was issued by such corporation for money or other property (other than stock and securities), and
3. Such corporation, during the period of its 5 most recent taxable years ending before the date the loss on such stock was sustained, derived more than 50 percent of its aggregate gross receipts from sources other than royalties, rents, dividends, interests, annuities, and sales or exchanges of stocks or securities.

In addition to the definition of "section 1244 stock," there are conditions, rules of application, and special rules under the Internal Revenue Code that dictate when and how this law may be applicable to any given situation. These explanations are complicated and beyond the scope of this website's topic. THEREFORE, YOU NEED TO CONSULT A TAX PROFESSIONAL REGARDING THIS MATTER.

Definition of Small Business Corporation: For purposes of Section 1244, a corporation shall be treated as a small business corporation if the aggregate amount of money and other property received by the corporation for stock, as a contribution to capital, and as paid-in surplus, does not exceed $1,000,000.

An "S" election is an election by a corporation to be taxed similar to a partnership (i.e. pass-through taxation). If the corporation qualifies, the board must decide whether or not the corporation will make an "S" election for tax purposes.

To make an "S" election, the corporation must file the federal IRS FORM 2553. There is no California form to file. The form includes its own instructions and explanations regarding when a corporation qualifies, what taxes the "S" corporation may owe, and how, when and where the form needs to be filed. To read more about qualifying for and making the "S" election, please read the IRS INSTRUCTIONS FOR FORM 2553.

NOTE: THERE IS A DEADLINE TO FILE THIS FORM, AND THE TAX CONSEQUENCES OF MAKING OR NOT MAKING AN "S" ELECTION ARE SIGNIFICANT. THEREFORE, THE BOARD, AND THE SHAREHOLDERS, SHOULD ALL CONSULT AN ACCOUNTANT OR OTHER TAX PROFESSIONAL REGARDING THIS MATTER AS SOON AS POSSIBLE.

THE CORPORATION'S CAPITAL STRUCTURE
The for the Minutes of First Board Meeting assumes that the corporation's capital structure consists of ONLY 1 class of stock (common stock). The is not programmed for other entries. If you have a more complicated share structure, you should not use the to prepare minutes.

CAN I USE DEBT-CAPITALIZATION?
The for the Minutes of First Board Meeting assumes that the corporation will NOT be capitalized through the use of debt. The is not programmed to prepare minutes if debt-capitalization will be used. The use of debt may be advantageous under certain circumstances, but also can create numerous problems. If you are considering using debt as part of the corporation's capitalization, you should not use the to prepare minutes, AND YOU SHOULD SEEK THE ADVICE OF AN ATTORNEY TO HELP YOU PLAN ANY DEBT ISSUANCE.

STATE AND FEDERAL SECURITIES LAWS
When a corporation issues shares, it must do so in compliance with state and federal securities laws. The makes no assumptions about the type of share issuance (and what exemptions will be relied upon) the corporation will make. If you use the for the Minutes of First Board Meeting to prepare your minutes, the minutes will contain general language stating that the officers of the corporation will comply with the securities laws. HOWEVER, IT WILL BE UP TO THE BOARD AND THE OFFICERS TO MAKE SURE THEY KNOW AND FOLLOW THE CORRECT METHOD OF COMPLIANCE. You can read more about this in the FREE PROPOSED AGENDA.