Do all s corps require shares, board of directors, and annual meetings


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Do all s corps require you to have shares, board of directors and annual meetings. I work for a very small software development firm (right passed a start-up, we actually have good stable income) and my boss says we have an S-Corp structure. Since he is the only one in charge and we are so small I have concerns about what would happen if he were to die, who would take over and what would happen. I am only an employee (Chief Technology Officer) and have put a lot of effort into this business with the promises of it paying off one day. As an employee can I have shares in this company and some sort of job security in case this happens? Is there any kind of s corp that does not have shares and a board of directors?

Thanks,

Frank

Legal Corporate Structure

asked Aug 17 '11 at 05:21
Blank
Frank
43 points
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  • Is this registered as a corp, or an llc? Or something else? – Nitrous Cloud 9 years ago

1 Answer


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For an S corp, I believe (and this hasn't been fact checked) that it can be a single person, and any board meetings can be with yourself. The owner may have outside investors that have shares in the company, so that would also be a factor. If he were to die, then I would expect the company to be treated as any other asset in the will absent any explicit directives in the articles of incorporation.

If you're the CTO, you're not "only an employee" (though that may be the case in a legal sense). If you want to take a more active role, then talk to the owner. Ask him if he's open to you investing in the company (buying shares, don't expect something like this to be given for free). And if he's open to it, then ask to review the articles of incorporation, ask what the succession policy is along with the exit policy for any other major share holders, ask about other investors, if he has a board, etc, as part of your due diligence.

answered Aug 17 '11 at 06:44
Blank
B Mitch
1,342 points
  • thanks, I will talk to him, buying shares should not be necessary, he owes me. I have a really active role in the company and have saved it from complete failure a number of times :( – Frank 9 years ago
  • @Frank, Note that "he owes me" can be a confrontational attitude that may get him started on the thought process of how he can become less dependent on you. Instead, suggest that he create an employee bonus plan as an incentive to doing good things for the company, and suggest that at least part of the bonus should be in the form of shares in the company to further align the employee's interest with that of the company. – B Mitch 9 years ago
  • i agree and I will not approach the actually conversion with him form that angle, instead I am considering starting it from a fairness angle. I recently found out that a entry level helpdesk person is making a third of what I make. If you look at it from responsibility vs salary I feel that is not right. Using that as a measure I am only performing 3 times as much that person but in reality I am probably performing 10+ times not to mention the nights and weekend I give up. – Frank 9 years ago

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