Your corporate governance documents should not be an afterthought. These primary business documents can play a dramatic role in how smoothly your business operates. By pouring the requisite attention and care into your corporate governance documents, you help to set the stage for your business’s success. The experienced corporate governance document attorneys at Ferlito Law Group in New York are well prepared to help. Consider contacting our corporate and business attorneys today to learn how you can prepare your corporate governance documents to ensure the financial and legal success of your company.
Understanding Corporate Governance Documents
Corporate governance documents are the legal governing documents that guide your business, and they generally break down into specific requirements, based specifically upon how your business is legally structured.
Corporations
If your business is a corporation, your corporate governance documents will likely include the following:
- Certificate of Incorporation, as identified by the New York State Department of State
- Bylaws
- Shareholders’ Agreement
Limited Liability Partnerships and Limited Liability Companies
In the state of New York, limited liability companies, including partnerships, require Articles of Organization and an Operating Agreement or Partnership Agreement.
In the end, these documents establish the rules that determine how your business will be managed and what your obligations and rights are as the business’s owners. Because how your business is managed is integral to its level of overall success, your corporate governance documents are far more than a formality.
Making Your Corporate Governance Documents Work for You
While it is true that you can obtain inexpensive templates online that can stand in for more comprehensive and individualized corporate governance documents, they are highly unlikely to address or resolve any of your company’s specific business needs or requirements.
In fact, there are three primary situations in which having well-considered and well-executed documents can move the needle considerably in terms of your company’s overall effectiveness. The accomplished corporate governance document attorneys at Ferlito Law Group in New York have the legal insight and focus to help you make your corporate governance documents work for you.
Resolving Conflicts Between Owners
If you started your company with co-owners you trust and are able to collaborate with well, then you expect that there will be no legal or financial challenges. However, operating a business, especially in today’s post-pandemic market, is unpredictable, and there may come a time when disagreements arise. Often, difficult decisions need to be made, and if you are not on the same page with your business associates or co-owners, the situation can turn into an impasse. If your corporate governance documents are created appropriately, they will establish the foundation to guide the path forward toward a resolution, while helping to manage any attendant drama.
Your governance documents should clearly delineate each owner’s rights and responsibilities regarding all the following:
- Voting
- Access to company records and books
- The distribution of assets
- Representation on the board of directors
If you have thoughtful corporate governance documents in place, it improves your chances of resolving the matter outside of court, and if your dispute does require litigation, these documents can help keep your investment – in terms of both time and expense – to a minimum.
Attracting New Investors
You naturally want to attract the right investors to your business, and when your corporate governance documents effectively reflect the vision and direction of your company, they can help you pave the way toward the investors you are looking for. These corporate governance documents allow potential investors to get a better feel for their rights and responsibilities if they do decide to invest with you – and to demonstrate that your company is in accordance with all applicable laws and documenting requirements.
Sophisticated investors – such as so-called angel investors, venture capitalists, and private equity firms – know what they are looking for and can be trusted to engage in every manner of due diligence when it comes to checking your company out. Failing to establish foundational corporate governance documents can potentially shut off an investment completely or delay the investment process.
Negotiating Sales and Mergers
Business sales and mergers can play a critical role in the growth of your business empire, but in order to remain at the table your corporate governance documents are going to need to be updated periodically. If a sale or merger is possible in the future, all parties will require accuracy. If your corporate governance documents are ambiguous or otherwise legally silent on certain matters, it can stall the proceedings and can impede the legal opinions you may need in order to finalize a sale or merger. In fact, your corporate governance documents will govern how the owners involved will decide whether or not to engage in the sale or merger in the first place. If your legal governance documents fail to live up to this task (by remaining silent on the issue, for example), you will need to turn toward the statutory rules, which can be much less accommodating or favorable to your side.
Establishing Good Corporate Governance
Keeping your corporate governance in excellent working order is not a one-and-done proposition, and all the following can help you tailor yours to your business’s unique goals:
- Establish a policy that guides your company’s code of conduct and ethics.
- Implement a tool for tracking your employees’ performance, which can help you nip potential performance issues in the bud.
- Put a polished financial reporting system into place that allows you to stay on top of what matters most and that keeps those who need to know in the loop.
- Hold regular meetings that allow everyone who matters to weigh on where your business is, where it is going, and how your corporate governance documents can help you get there.
Reach Out to an Experienced New York Corporate Governance Document Attorney Today
The skilled New York corporate governance document attorneys at Ferlito Law Group dedicate their practice to helping companies craft tight corporate governance documents that bolster their brand and help guide their success. These documents do a lot of heavy lifting, and yours should be more than simply a checkmark on a to do list. We are standing by to help, so please do not wait to contact us today.