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Do I Need A Corporate Binder?

November 7, 2015

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Do you need a corporate seal?  Nope!  Read more

All states, including California, Delaware, and New York, require that a corporation keep correct and complete copies of its books and records, including minutes of shareholders’ and directors’ meetings.[1] The states also all provide for the inspection of such books and records upon demand by a shareholder.[2] Corporations have traditionally kept paper copies of required books and records in binders at the corporation’s headquarters. But are corporations required to keep paper copies of books and records on hand at all times?

Not at all. The states’ corporation statutes have kept pace with the move to electronic recordkeeping. In California, for example, the Corporations Code specifically states that a corporation’s “minutes and other books and records shall be kept either in written form or in another form capable of being converted into clearly legible tangible form or in any combination of the foregoing.”[3] The New York Business Corporation Law has a similar provision,[4] while the Delaware General Corporation Law is even more explicit in providing for electronic recordkeeping through the use of an “information storage” device or method.[5] As a result, “any computerized or other method of information storage and retrieval is acceptable,”[6] so long as the information can be quickly retrieved and converted into paper form.[7]

In short, as with corporate seals, your company can obtain a corporate binder to hold paper copies of books and records, but there is no legal or practical reason to do so.

[1]See Cal. Corp. Code § 1500; Del. Code Ann. tit. 8, § 224; N.Y. Bus. Corp. Law § 624(a).

[2]See Cal. Corp. Code § 1601; Del. Code Ann. tit. 8, § 220; N.Y. Bus. Corp. Law § 624(b).

[3]Cal. Corp. Code § 1500.

[4]See N.Y. Bus. Corp. Law § 624(a) (“Any of the [corporation’s] books, minutes or records may be in written form or in any other form capable of being converted into written form within a reasonable time.”).

[5]Del. Code Ann. tit. 8, § 224 (“Any records maintained by a corporation in the regular course of its business, including its stock ledger, books of account, and minute books, may be kept on, or by means, of, or be in the form of, any information storage device, or method provided that the records so kept can be converted into clearly legible paper form within a reasonable time.”).

[6]1 R. Franklin Balotti & Jesse A. Finkelstein, Balotti and Finkelstein’s Delaware Law of Corporations and Business Organizations § 7.50 (2015).

[7]Shareholders can also obtain the records in their original computerized form if they are willing to pay for them. See Giovanini v. Horizon Corp., No. Civ.A. 5961, 1979 WL 178568 (Del. Ch. Sept. 10, 1979) (requiring magnetic computer tape containing list of shareholders to be turned over to shareholder who was willing to obtain the tape at his own expense).

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