Keep Good Corporate Minutes
Business Tip of the Month (June): An employee who is required to communicate with board members, take notes at board meetings, and compile corporate minutes may cringe at such a tedious and often thankless assignment.
But carefully prepared corporate minutes are valuable, even essential, in many circumstances. They can be used to convince state regulators that directors performed their fiduciary responsibilities with due care. During an audit, favorable tax treatment — including the deductibility of officer compensation and travel-related expenses — may hinge on unequivocal documentation in the board minutes. If a company's corporate status is called into question, shareholders may become personally liable. Accurate board minutes can be used to demonstrate that the corporation has maintained its legal status and acted in the best interest of its shareholders. And by documenting the basis for board decisions, meeting minutes may provide insight to managers who must implement corporate policies and procedures.
When should meeting minutes be kept? Of course, every routine discussion doesn't need to be documented. But at a minimum, a record should be made when the board selects new corporate officers, implements significant new policies, establishes new retirement plans, borrows significant amounts, or sells major assets. In fact, minutes should be taken at any official meeting in which significant discussions are held and corporate decisions made.
What information should be included? Without necessarily identifying the individuals who spoke, the minutes should document the scope of the discussion. The goal should be to summarize the major points that support the final decision or resolution. The minutes might also indicate, in general terms, the time spent reaching a decision. This type of language — "the board then discussed the matter at length" — may serve to show that agenda items were not passed over lightly. Should the company's position ever be questioned in court, such verbiage may provide support for the board's decisions. In addition, the minutes should record any documents considered (though such documents may be incorporated by reference only). If board members relied on the advice of attorneys, accountants, or other professionals, this information should be included as well.
What should be left out? In general, it's a good idea to omit a record of the detailed discussions that led to final decisions. Such "he said/she said" transcripts may later provide fuel to those who want to question the firm's actions.
In a court of law, the minutes speak for the corporation. Discuss your minute taking process with your attorney.
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