Year-end corporate governance and compliance is an annual corporate chore many small companies simply put off, until its too late. Corporate governance is a continuous process in the life of any San Diego or California corporation. But what exactly is corporate governance and compliance, and why is it important to end the year with a clean corporate house and a plan for next year?
Key Takeaways About Year End Corporate Governance and Compliance in California:
- Corporate governance is basically defined as the planning and execution of the responsibilities associated with rules established in the corporate documents about how a corporation is to be run and managed, and the purpose behind the company’s existence. Corporate governance also extends to ensuring the corporation is in compliance with all laws, regulatory compliance and even tax obligations.
- Corporate governance activities include, but are not limited to, an update of all corporate documents, employment practices, updates to federal, state and local laws, required annual meeting(s) and corporate minutes, risk management, governmental reporting, ethical behavior of all employees.
- Governance and compliance looks at what is going well, what needs improvement, and where the company intends to go in the short and long-term future.
What is Corporate Governance?
Corporate governance is basically defined as the planning and execution of the responsibilities associated with rules established in the corporate documents about how a corporation is to be run and managed, and the purpose behind the company’s existence. Corporate governance also extends to ensuring the corporation is in compliance with all laws, regulatory compliance and even tax obligations.
Corporate governance touches every aspect of the company and all who work for it, from the board room through executives and managers and ultimately throughout the work force. It primarily is focused upon the controlling members or shareholders in smaller organizations, and in a larger corporation, the board of directors and executives and how they run and manage the company.
Corporate governance should address many aspects of corporate life including but not limited to:
- Financial reports
- Update of corporate documents such as the shareholders’ agreement or operating agreement
- Maintenance of minutes and required periodic or annual meetings
- Communication with employees and the shareholders of the corporation
- Board appointments and responsibilities
- The relationship between the company’s management and the board itself
- Risk management and ensuring the proper conduct of the company and its employees
- The performance of the company itself
- Completion and submission of all required reports and forms for external government agencies and tax authorities
Corporate governance and compliance is a continuous process working for improvement and based upon trust, accountability and ultimately transparency. Corporate governance and compliance should ensure regular updates of corporate documents and supporting agreements. Security measures should be developed, implemented and monitored to protect the company and its assets and to ensure the legal, moral and ethical conduct of its employees and officers.
The Focus of Good Corporate Governance
Many corporations are focused upon “social responsibility” as well as the culture of the company and the dynamic vision which enlightens and drives the activity of all associates. The “vision” and “values” of your company should be clearly established and communicated throughout the organization to ensure consistent conduct and protection of the image of the company in the eyes of not only it’s customers, but suppliers and the general marketplace as well.
Compliance with all federal, state and local laws and regulations falls under this discussion as well.
A Plan Going Forward
What is the business plan going forward? What is working? Let’s add fuel to that fire in terms of financial support and additional resources. What are some of our greatest challenges? How can we adjust what we are doing, gain new perspective, bring in additional skill-level employees or partners and get things heading in the right direction?
What are some potential new market opportunities? Is there a new vertical or geographic market we should consider for expansion? Is there an important capacity or gap in our organization which would benefit from the acquisition of another company’s assets or the company itself? Could a joint venture open the door to new opportunities and additional revenues and profits?
A business without strong corporate governance and compliance and year end planning is destined to stagnate and ultimately fail. Not all plans succeed, but many do! When something isn’t successful you apply what you’ve learned and take a new tact. When plans succeed they should be replaced with new plans to support and lock in the successes we’ve gained while reaching for the next set of opportunities.
Pro-Tip: “Corporate governance is maintaining your corporation in a legal and proper fashion, such that you’re in compliance with all the laws of the state of California, so that you may be respected in your corporate form as a separate legal entity. It’s about fairness, it’s about fraud, it’s about doing business in a proper manner, which doesn’t rip off customers, doesn’t damage vendors or lenders. If you maintain your corporation in a proper fashion, keep your minutes, keep your statement of information with the Secretary of State filed, have your meetings and maintain proper records and do business separately, then you should have benefits.
You should have tax benefits, you should have investor benefits. You should have benefits of when you want to sell your company. And someone comes to look at it like when we sell a company, we have to come up with something called schedules. Schedules are what we use to identify all the different elements to tell a buyer this is a proper corporation and it’s a safe bet to purchase or to merge with. So all those things. And on top of that, if you comply with corporate governance, you’ll end up doing better in business over the last 35 years. The ones I see that don’t hold their meetings, that don’t keep records, that don’t refuse to commingle, those ones don’t do as well. The ones that really stay on it and run their business the right way are usually much more successful.” – Dan Watkins, Founding Partner
Working To Help You To Fulfill Corporate Governance and Year End Planning
The Watkins Firm has 40+ years of experience serving the business, science and tech, real estate and medical / healthcare communities here in San Diego and across California. We are business owners ourselves. We have helped the smallest of companies to get up and going. We have served as legal counsel in substantial mergers and acquisitions here in California and for clients across the country.
Draw on that experience. We can help to manage the small details of corporate governance and compliance, provide insight into your challenges and plans and help to support your business as it finishes this year and looks toward the next.
Corporate governance and compliance and year end planning is a continuous process of refinement, improvement, clarification and transparency. We invite you to review our podcast Episode 24 – Corporate Governance as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
Meet Daniel Watkins:
Daniel W. Watkins is a true people person who sincerely listens. He cares deeply about what others are going through. Dan enjoys digging into the facts and finding creative solutions to problems. He contributes his insights candidly and constructively.
Dan’s interest in people make him deeply invested in every relationship and his exuberant personality makes him a true litigator. Dan fights for his clients with a fierce and calculated commitment.
Dan has practiced in the areas of business, medical practices and healthcare business, high tech/science, real estate and employment defense law since 1987. He is a trusted litigation strategist and true trial attorney with over 50 jury and bench trials to his credit. Dan has successfully represented both large companies and individuals and achieved substantial victories in well-publicized trials throughout California and the U.S.
He is experienced in business and corporate formation and administration, as well as all forms of alternative dispute resolution, including binding arbitration and mediation.
THE ROAD TO BECOMING A BUSINESS LAWYER AND LITIGATOR
Dan has almost 40 years of experience working with, for and against some of the largest insurance companies in the country. He has successfully tried and litigated cases in the areas of Healthcare Compliance, Commercial Litigation, Unfair Business Practices, Fraud, Breach of Contract, Battery, Premises Liability, Product Defect, Medical Malpractice, Discrimination, Sexual Harassment, Construction Defect, as well as Unfair Competition, Defamation, and Trade Secrets.
In December 2003, Dan commenced litigation against Health South Surgery Centers-West, Inc and its’ subsidiaries, exposing the company’s extensive mismanagement and misconduct of its’ surgery centers. Dan has also been asked by some of California’s largest municipalities and corporations to conduct legally required investigations into matters involving alleged employment discrimination and harassment.
