ANNUAL REPORTS AND ANNUAL MEETINGS IN NORTH CAROLINA AND DELAWARE
February 19, 2015
By James Forrest and Jeff Wolfe
As tax deadlines approach, we thought it would be helpful to remind our clients that are entities organized in North Carolina and Delaware about certain annual obligations (and recommendations). In particular, this article will summarize the requirements for annual reports and annual meetings under North Carolina and Delaware law.
In North Carolina, the obligations to file an annual report are as follows:
· 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 (e.g., April 15th for a fiscal year that ends on December 31st).
· Limited liability companies are required to file their annual reports by April 15th of each year (N.C.G.S. § 57D-2-24(b)), either electronically or in paper form with the Secretary of State.
· Professional corporations, non-profit corporations, and professional limited liability companies are not required to file annual reports, but they are required to update changes to their information on file with the Secretary of State.
If you choose to file your North Carolina annual report online, you may do so on 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.
In Delaware, corporations are required to file an annual report and pay annual franchise taxes by March 1 of each year. Delaware limited liability companies are required to pay an annual tax by June 1 of each year but are not required to file an annual report. For more information on how to calculate the amount of Delaware taxes owed and to file and pay online, please visit the Delaware Secretary of State’s website at http://corp.delaware.gov/paytaxes.shtml.
The attorneys at the Forrest Firm are also available to assist if you have any questions regarding the annual report requirements or procedures for North Carolina or Delaware entities.
Under North Carolina and Delaware law, corporations are required 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 both North Carolina and Delaware law.
There is no mandatory obligation in North Carolina or Delaware for a limited liability company to hold an annual meeting as described above unless such an obligation is included in the LLC’s operating agreement. 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.
Please reach out to the attorneys at the Forrest Firm if you need assistance with conducting an annual meeting or drafting a written consent in lieu thereof.