Holding a First Meeting of the Board of Directors

After the owners appoint directors, file articles of incorporation, and create bylaws, the directors must hold an initial board meeting to handle a few corporate formalities and make some important decisions. At this meeting, directors usually:

• set the corporation's fiscal or accounting year
• appoint corporate officers
• adopt the corporate bylaws
• authorize the issuance of shares of stock, and
• adopt an official stock certificate form and corporate seal.

Additionally, if the corporation will be an S corporation, the directors should approve the election of S corporation status.

Exemptions to Securities Registration

Fortunately, most small corporations qualify for exemptions from securities registration. For example, SEC rules do not require a corporation to register a "private offering" -- that is, a non-advertised sale to a limited number of people (generally 35 or fewer) or to those who can reasonably be expected to take care of themselves because of their net worth or income earning capacity. And most states have enacted their own versions of this SEC exemption. In short, if your corporation will issue shares to a small number of people (generally ten or less) who will actively participate in running the business, it will certainly qualify for exemptions to securities registration.

For more information about federal securities laws and exemptions, visit the SEC website at http://www.sec.gov. For more information on your state's exemption rules, go to your secretary of state's website. (You can find links to every state's site at the website of the National Association of Secretaries of State, http://www.nass.org.)