The main advantage of corporate establishments is that the shareholders are mostly free from liabilities except for the equivalent of the money they have invested.

The corporation is legally seen as a separate entity that can incur its own debt, buy and sell property, do business in its own name and to sue and be sued separately from its investors.

This also applies to limited liability company’s (LLC) members, and a limited partnership’s (LP) limited partner.

However, there are certain actions of a shareholder, a director or an officer that may risk the company’s status as a legal entity.

Actions that neglect to treat the company as a separate entity will result to the courts and the IRS to do the same.

If that happens, it will affect the investors’ tax status and personal liability.

To avoid crossing the line and maintain the veil that separates the investors from the business, the company should adopt measures of good governance and keep everything formal.

Some steps investors, directors and officers can take are holding meetings, adopting resolutions and preparing minutes.

A way to keep a company’s corporate veil is by keeping good corporate minutes and preparing them in good fashion.

Preparation of minutes and resolutions is not a difficult task and it does not require any special skills.

The company just needs to make an effort to start systematizing the process of generating corporate meeting minutes and resolutions to cover official company business.

Once a system is in place it can be automated.

Corporate minutes of a meeting refer to the written record of a meeting. It often contains an overview of the structure of the meeting that contains:

• A list of all those present

• A statement of the various issues before the participants

• The responses of each thereto

Corporate resolution on the other hand is a legal document that is used as evidence of a decision made by a board of directors or of the shareholders.

The resolution can be about any subject but one that is very common, because it is required by banks and securities firms to open accounts, is defining the individuals that will be authorized to act on behalf of the corporation.

A corporate secretary is usually the one charged with recording the events and actions that transpired in a corporate meeting.

A good corporate secretary should understand that resolutions in minutes could be likened to a contract between the corporation and the directors or shareholders.

Just like any contract, the language in the minutes and resolution should be simple, clear and unambiguous.

This process will help keep the formality in the processes of the company and uphold the division between the investors and the corporation.

That should prevent the shareholder’s personal assets during litigation

To know more about preparations of meetings and resolutions, or about other ways to avoid personal liabilities against litigators, you should contact your corporate lawyer for assistance.