A small business client of our firm received an “official notification” that his corporate formalities are not being observed. If he immediately sends in $175 before it’s too late, he can avoid sanctions “including audits, lawsuits and summons.” If that wasn’t enogh to generate a little anxiety, there is a “Personal Liability” section, in bold type, stressing that failure to follow corporate formalities will expose shareholders to personal liability.
The form then emphasizes that action must be completed within 20 days to ensure “timely processing” of the corporate miunutes. Upon receipt, miuntes and resolutions will be prepared just in the nick of time, before anything bad happens. There is no justification for the urgency set out in the form, or why “timely processing” is so important. Our firm’s turnaround time on the same documents is less than one day.
I think this mailing is deceptive advertising. Don’t fall for it. It implies there is an impending emergency and the corporation is actually out of compliance. Why else would a company get a mailing from “Board of Minutes and Resolutions/ Compliance division in Sacramento?
Oh, and the “real address of the sender is a UPS STORE
915 L ST # C
SACRAMENTO, CA 95814-3707
You can verify that by calling 916-444-3214.
It appears to be deceptive advertising under the California False Advertising Act, California Business and Professions Code § 17500 et seq., and the Unfair Business Practices Act Business and Professions Code § 17200 for at least following reasons:
1. The form is intended to be confused with official state government correspondence.
2. The language pressures the recipient into acting quickly because of an assumed violation of law.
3. The corporate ID number gives the impression the form is government generated
4. The apparent Sacramento location indicates a government office when a post office drop is actually used.
5. The use of the terms “compliance division,” “notice date,” and “enforcing” infer that the recipient is under official investigation.
If you are a small business corporation, made a point to have your attorney review corporate minutes and resolutions and ensure formalities are observed. Often there are significant matters that should be in the minutes, yet this solicitaiton makes no effort to ensure the preparation of accurate and legally effective minutes. Many law firms provide this minutes and resolutions as a maintenance service at minimal charge, and others include this service in a package annual legal checkup provided to small businesses. Most attorneys wouldn’t charge $175 for a simple review of and preparation of routine small business annual minutes.
Thanks to our client for the heads up. And see them for all your yachting needs.
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