A TIMELY REMINDER: ANNUAL REPORTS AND ANNUAL MEETINGS IN NORTH CAROLINA
February 25, 2014
By James Forrest
As annual report deadlines are just over the horizon, we thought it would be helpful to re-post this article from February of last year, summarizing certain annual requirements (and good ideas!) for our corporate clients (Note that the statutory reference for LLC annual reports has since changed to 57D-2-24).
Two issues that we field questions on routinely at the Forrest Firm are annual reports and annual meetings. Both issues are summarized below:
In North Carolina, corporations and limited liability companies are required to file an annual report on an annual basis.
Corporations are required to file their annual reports to the Secretary of Revenue by “the due date for filing the corporation’s income and franchise tax returns” (N.C.G.S. § 55-16-22(c)). At the option of the filer, an annual report may be filed directly with the Secretary of State in electronic form — and in such case, the form is due by the fifteenth day of the fourth month following the close of the corporation’s fiscal year. Professional corporations and non-profit corporations are not required to file annual reports.
Limited liability companies are required to file their annual reports by April 15th of each year (N.C.G.S. § 57C-2-23(c)).
You may file online at the Secretary of State’s website at www.sosnc.com. Clicking on “File Annual Reports Online” allows you to file your report in approximately 10-15 minutes. The fee, payable by credit card or electronic check, can be paid online. Alternatively, you may file a paper copy and remit the applicable fee directly to the Department of Revenue, along with the company’s tax return. You can download a pre-populated annual report form from the NC Secretary of State’s website.
More general information can be found at the NC Secretary of State’s website at the following link: https://www.secretary.state.nc.us/corporations/pdf/OnlineAnnualReportFilingInstru.PDF. You can also call for assistance at the following number: 919.807.2225.
In addition, corporations are required by N.C.G.S. § 55-7-01(a) to hold an annual meeting of the shareholders. The purpose of such a meeting is usually to elect directors for the upcoming year, among other things. It is also common for a corporation to ratify certain material decisions from the previous year at such a meeting. A corporation is free to hold such a “meeting” via a written consent action in accordance with N.C.G.S. § 55-7-04.
There is no mandatory obligation in the NC Statutes for a limited liability company to hold an annual meeting as described above, however, it may be good practice to do so nonetheless (via an actual meeting or via written consent action) in order to ensure that the LLC is operating in accordance with proper formalities (e.g., tidy corporate minute books, holding regular meetings, no commingling of bank accounts, etc.).
Companies that do not hold annual meetings of shareholders/members or properly keep a book of minutes or written consent actions open themselves up to plaintiffs and their lawyers arguing that the corporate veil of the company should be pierced, thus potentially making the owners personally liable for the debts and liabilities of the company.