A business is required to “maintain” the business in order to continue to be recognized as a legitimate business entity. This “maintenance” is referred to as corporate governance. Governance refers specifically to the set of rules, controls, policies and resolutions which dictate corporate behavior.  The specific governance structure of a business determines the rights and responsibilities between the different stakeholders of the business, including the board of directors, managers, shareholders, creditors, auditors, and regulators. Corporate affairs and corporate objectives are also affected by the process of corporate governance.

What “maintenance” is required depends on the type of business entity and the state in which the business entity is established. For example, every corporation and limited liability company authorized to transact business in Massachusetts must file an annual report. In addition, Massachusetts requires a corporation to have an annual shareholders’ meeting. This meeting is necessary to elect the Board of Directors and to conduct other regular business.