A Year-End Governance Check-Up for Private Companies

Governance in a private company is easy to put off. There are customers to serve and payroll to meet, and nobody is asking to see the minute book. Then a lender, investor or buyer asks, and gaps that took minutes to prevent take weeks to repair. The end of the year is a natural moment for a short check-up. This checklist is general guidance; your attorney can tell you what your entity type and state require.

Ownership and equity records

• Confirm your cap table or membership ledger is accurate and matches signed documents.
• Make sure every stock issuance, option grant or membership change this year was properly approved and documented.
• Check that vesting schedules are recorded and that departing holders’ unvested equity was handled correctly.
• Confirm any tax filings connected to equity grants were made on time, with guidance from your tax professional.

Decisions and approvals

Review the major decisions the company made this year and confirm each has the right approval on record. Common examples include significant contracts, loans, leases, executive compensation, equity grants and changes to the business. If the board or members met, make sure minutes are complete and filed. If decisions were made informally, talk to counsel about documenting them through written consents.

Also confirm that the company held any annual meetings its bylaws or operating agreement require, and schedule next year’s in advance.

Officers, directors and authority

• Confirm the current list of officers, directors or managers and that state filings reflect them.
• Review who has authority to sign contracts and access bank accounts, and remove anyone who has left or changed roles.
• Check that any director or officer conflicts of interest were disclosed and handled appropriately.
• Review whether the board’s composition still fits where the company is going.

Policies, insurance and risk

Good governance extends to how the company manages risk. Review key policies, such as expense approval, data security and employee handbooks, and update those that no longer reflect reality. Meet with your insurance broker to confirm coverage still fits the business, including general liability, property, cyber and, where relevant, directors and officers coverage. Note any significant risks that emerged this year, such as a key customer, supplier or employee the business now depends on, and decide who is responsible for addressing them.

Plan for next year

Close the check-up by setting a governance calendar for next year:

• Board or member meeting dates.
• State annual report and registered agent deadlines.
• License and permit renewals.
• Insurance renewal dates.
• A date for next year’s check-up.

Store everything in a secure, organized place that more than one trusted person can access. An hour spent each year keeps the company ready for opportunities and reduces the chance that missing paperwork stands in the way of a deal or a loan.