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What You Need in Your Corporation's Minutes

Posted on 09 Jun 2011 by admin | Filled under: trademarks

Corporate minutes have been emphasized following the adoption of the Sarbanes-Oxley Act of 2002. Because corporate minutes can serve as the primary evidence supporting a board's decision in the event of a lawsuit, the amount of detail and information the corporate minutes contains is important.

The fundamental role of corporate minutes is to operate as a record of a board's decision and the general proceedings of a meeting. Well-kept corporate minutes also note director dissent where appropriate, and can act as a point of reference in future board action. In the post Sarbanes-Oxley environment, corporate minutes also provide greater accountability.

Generally, corporate minutes include these items:

Name of the organization

Location, date, start and end times of the meeting.

Type of meeting: general or special (ie: meeting for a specific committee within a corporation)

List of participants: names of board members present separating officers and directors from invited staff such as guest speakers and advisers, names of board members absent

Names of those who make specific presentations: expert speakers, guest speakers, guest advisers, etc.

Quorum: minimum number of board members entitled to vote that must be present at a meeting before any legal transaction regarding business issues; presence, or lack of, quorum at meeting by what time

List of materials distributed during the meeting: these documents should be gathered as exhibits and attached to the corporate minutes; explicitly reference the type of media (ie spreadsheet, PowerPoint, etc)

Motion and action: a brief description of each topic on the agenda and the action taken by the board regarding that topic; specific decisions including whether or not to take action should be noted; acknowledgement of debate should be included as well. Corporate minutes should also reflect the differing levels of significance of each topic on the agenda and indicate the proportionate attention spent on these topics.

Abstentations and dissenting votes: when appropriate, reflect directors who refrain from voting or participating in the discussion due to stated reasons

Confirmation of the action taken, including the final decision taken by the board

Lawyer-Client privileged matters: these items should be noted as such, with no further elaboration necessary. If additional detail is needed, they should be marked as such in a separate memo and kept apart from the other minutes in a confidential location

Key committees: proceedings of committees with specific regulatory importance (ie audit, compliance, executive compensation)

Follow-up: notation regarding any actions that require follow-up by the board or staff, or any actions taken as follow-up by the board or staff.

Many corporate minutes opt to not record the names of specific people who make motions, second them, or vote against it. In the event of a lawsuit, the records of these names provides the plaintiff with details about who supported or opposed the action and provides a ready list of potential witnesses for either side. Confidentiality regarding specific board member names is respected to prevent divisions within the board.
Although corporate minutes should account for much of the action occurring during a meeting, it should not be a word-to-word transcript. It should be concise and with enough detail to understand how the board reached its decision. The items listed above are merely suggestions, and those with "best practices" account for further detail within their minutes