Corporate Services –
Incorporation, Minutes and Registered Agent Services

What You Should Know About Texas Corporate Requirements
and Why You Should Care About Corporate Formalities

Failing to follow corporate formalities can:

- make it more difficult to sell your business
- allow “missing founders” to claim they own shares when a “value event” occurs
- result in your corporation being consolidated with an “affiliated” bankrupt entity
- allow the IRS to treat loan repayments as taxable dividends to shareholders

Piercing the Corporate Veil – An Unnecessary Argument

A principal reason for forming a corporation is to protect its shareholders against business liabilities. Under the doctrine of “piercing the corporate veil,” a shareholder loses this protection against personal liability. Although Texas amended its corporate statutes to eliminate shareholder liability on the “basis of the failure of the corporation to observe any corporate formality,” TBOC § 21.223 some courts and legal commentators have not recognized this change. While the better view is that ignoring corporate formalities is, by itself, an insufficient basis for piercing the corporate veil, the real question is – why risk the expense of litigating the issue if compliance is less expensive?

Corporate Formalities under Texas Law

Annual Meetings Required

Texas law requires corporations to hold a meeting of shareholders every year at the time specified in the Bylaws. TBOC § 21.351. Written notice of a meeting in accordance with TBOC § 6.051 shall be given to each shareholder entitled to vote at the meeting not later than the 10th day and not earlier than the 60th day before the date of the meeting. Directors shall be elected at the first annual shareholders' meeting and at each annual meeting thereafter. TBOC § 21.405.

Minutes

Every Texas corporation should prepare minutes of all meetings of the shareholders and directors. The minutes should be approved by the appropriate parties, signed and placed in the corporate minute book with copies of the notices of the meetings sent to the shareholders and directors. Important corporate actions authorized by shareholders and directors without a meeting should be documented with Actions by Written Consents and added to the corporate minute book.

Actions by Written Consent

In lieu of actually holding a meeting, small businesses typically execute unanimous “written consents” adopting resolutions to approve corporate actions. All of the shareholders must sign the written consent to approve a corporate action unless provided otherwise in the Certificate of Formation. If a written consent is signed by less than all of the shareholders, the corporation must promptly give notice to the other shareholders of the action taken. TBOC § 6.203.

Electronic Notice of Meetings and Voting

With proper shareholder consent, the required notices for shareholder meetings may be given by facsimile, e-mail, posting on an electronic network if notice alerting the shareholder to the posting is given, or by any other form of electronic transmission consented to by the shareholder. TBOC § 21.3531. Similarly, notice of the date, time, place, or purpose of a regular or special meeting of the board of directors may be provided to consenting directors by electronic transmission. TBOC § 21.411. The standards and conditions for electronic voting may be set forth in the Certificate of Formation or the Bylaws.

Will You Take the Time to Comply?

Probably Not. You are too busy building your business, managing employees, focusing on your core competencies and responding to more urgent matters. From a legal perspective, preventive business law is the epitome of Ben Franklin’s maxim that an “ounce of prevention is worth a pound of cure.” Compliance can eliminate issues in litigation, selling your business, IRS audits and bankruptcies.

Solutions for Business Budgets

Entrepreneurs live on a budget – a fact difficult to reconcile with legal fees billed by the hour. Because of the complexities of legal issues and the unpredictability of variables, it is difficult to offer most legal services at fixed rates. However, Drisdale Law Firm is able to offer three levels of corporate services - the Bronze Plan, the Gold Plan and the Formation Plan – all at the fixed rates listed below through April 30, 2011.

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The Gold Plan – Premium Annual Corporate Services

for existing corporations

The Gold Plan includes the Bronze Plan services plus the additional services listed below – all at the fixed rates listed below through April 30, 2011.

Registered Agent and Registered Office Requirements under Texas Law. The street address of the corporation’s initial registered office and the name of the initial registered agent at the office must be included in the Certificate of Formation. TBOC § 3.005. Each corporation shall designate and continuously maintain in this state: (1) a registered agent; and (2) a registered office. TBOC § 5.201. The registered agent is an agent of the entity on whom may be served any process, notice, or demand required or permitted by law to be served on the entity. TBOC § 5.201(b). The registered office must be located at a street address where process may be personally served on the entity's registered agent. TBOC § 5.201(c).

Service of process is the legal notice and complaint that the corporation has been sued. Drisdale Law Firm is strictly a business law firm and does not provide litigation services. Any legal process received as registered agent will be forwarded to a litigation attorney of your choice. 

Texas franchise/margins tax filing information received by Drisdale Law Firm as registered agent will be forwarded to you or your tax adviser.

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The Formation Plan

for a new corporation

The Formation Plan is available only to start-ups. It includes the Gold Plan services plus the incorporation services itemized below - all at the fixed rates listed below through April 30, 2011.

The Formation Plan does not include tax advice. You should consult with your CPA or tax advisor before forming a corporation about the tax benefits of different types of entities and available tax elections  and to confirm that your tax advisor will obtain your corporation’s EIN, file all tax-related forms and make any tax elections before the applicable deadlines.

* Subject to adjustment for increases in State filing fees. On January 1, 2011, filing fees charged by the Texas Secretary of State of Texas were $300 for a Certificate of Formation plus a $25 expediting fee for rush filings. See https://direct.sos.state.tx.us/help/help-corp.asp?pg=fee for the fee schedule.

To maximize efficiencies from technology, the Bronze, Gold and Formation Plans are being offered only on a “virtual law firm" basis through the Drisdale Law firm website.

How to Start

Click the Google Checkout link for your desired plan above. After your credit charge is approved, an Information Questionnaire for your plan will be emailed to you.