Q: I’ve come to your office for the first time; I’ve waited way too long to hire you, and you see that I haven’t had a board meeting in two years. What’s the fix?
A: A fix would be to have a board meeting. If, for instance, particularly if there’s only one director, you do board consent in lieu of a meeting, and you ratify transactions or agreements that really should have been brought before the board of directors, typically ratification after the fact may be sufficient. But, it’s important to have that in place before something bad happens.
It’s possible to take corrective action in many cases and for that correction to be effective, but it’s much more difficult to do that if, for instance, you’ve been sued and part of the suit is an allegation of lack of proper authorization of a transaction or lack of appropriate documentation of a certain transaction. It’s much more difficult to put that kind of documentation in place or to ratify something if there is already someone who has raised that issue in a suit against the business.