Roles and responsibilities
In a corporation, shareholders elect directors, directors oversee the business and appoint officers, and officers manage day-to-day operations. LLCs may be member-managed or manager-managed, with roles defined by the operating agreement.
Confusion often arises in small companies where the same individuals hold multiple roles. Recording the capacity in which a decision is made adds clarity.
Approvals and consents
Governing documents and state law specify which actions require board, manager, or owner approval. Common examples include issuing equity, approving major contracts, borrowing, and selling substantially all assets.
Written consents in lieu of meetings are often permitted and are a practical way for smaller companies to document decisions.
Conflicts of interest
When a decision-maker has a personal interest in a transaction, disclosure and approval by disinterested parties help demonstrate fairness. State law and governing documents shape the specific procedures.
Records
Maintaining a minute book, equity ledger, and copies of filed documents supports diligence, financing, and dispute resolution. Periodic reviews keep records current.
Related Reading
For an overview of how this topic connects to everyday business decisions, see our pages on corporate governance and corporate & business law.
