Archive for April, 2012

Duties Of Agents And Brokers

April 13, 2012

Are you aware of the legal duties of your insurance agent or broker?

Your insurance agent has to perform the following duties on your behalf:

• When you notify your agent or broker that you or your business acquired a new vehicle he or she may be liable for failure to advise you that the vehicle may not be covered by your insurance

• Your broker may be personally liable for failing to recognize and correct gaps between your primary and excess policies.

• Your broker has a duty to call your attention to any clauses in claims made policies if you give notice of a potential claim occurring during the policy period.

• Your agent or broker has a special duty to respond to your inquires regarding sufficiency of insurance coverage.

• Your agent or broker is liable to you if he or she misrepresents the nature, extent or scope of coverage, especially if he or she held themselves out to you as having expertise in the type of insurance you are seeking.

• Your agent or broker may be liable to you or your business for failure to advise you about cancellation or renewal of policies except where non-payment of premium is involved.

• Your agent or broker may be liable to you or your business for failure to obtain coverage requested by you.

• Your agent or broker has a duty to investigate a non-admitted insurers financial strength
before recommending placement of insurance with that insurer.

Contact your insurance attorney, business attorney or risk manager if you believe your agent or broker breached any of these duties.


California Corporation Annual Minutes

April 13, 2012

California Corporations Do not Have To File Annual Minutes With The Secretary Of State

Have you been receiving official looking notices advising you that you have prepare and file your annual minutes with requests that you pay them a fee to do so?

My wife is a CPA and we share offices and sometimes clients. Several times a year we get calls from clients asking if mailings they received from Corporate Compliance Center, Corporation Compliance Recorder, California Corporation Services and similar businesses.

Sound familiar?

What each of these solicitations have in common is that they may contain wording stating that “this is not a government document”, however the wording is in fine print and may be missed.

These solicitations correctly cite California Corporations Code sections 600, 1500, and 9510(a) to make the solicitations look like a government document. All of the codes are correctly cited.

Section 600 provides in pertinent part, “An annual meeting of shareholders shall be held for the election of directors on a date and at a time stated in or fixed in accordance with the bylaws.”

Section 1500: “Each corporation shall keep adequate and correct books and records of account and shall keep minutes of the proceedings of its shareholders, board and committees of the board and shall keep at its principal executive office, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of shares held by each. Those 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. When minutes and other books and records are kept in a form capable of being converted into clearly legible paper form, the clearly legible paper form into which those minutes and other books and records are converted shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been, provided that the paper form accurately portrays the record.”

Section 9510(a) relates to record-keeping requirements for non-profit corporations.

These mailings are correct when they state that annual meeting minutes must be prepared, but neither your company or the service companies file the minutes with the Secretary of State.
It is important that these minutes be keep in a corporate minute book for your own use and protection of the corporation.

These services are offering to prepare your annual corporate minutes for a fee, but in my opinion these minutes are best prepared either by corporate officers/directors, if they know how to do so, or by your business attorney (who can also review the corporations’s prior meeting minutes and bylaws for potential areas for improvement, changes, and the like).

Review your minute books now. Make sure that any major decisions made during the current or immediately past fiscal year are recorded in the minutes.

Ask your business attorney or myself as to what important decisions should be placed in the minutes.