Board Of Directors' Meeting Minutes
Everyone knows that keeping minutes of board meetings is tedious. In addition to that, no one really knows how to do it properly. For example, how detailed should they be? What has to be included and what doesn't? Can the minutes get you into trouble? Can they get you out of trouble? By law, corporations are required to keep minutes of meetings of directors. But what the law does not spell out is how to do it or even the risks and rewards of recording minutes. Here are some.
ADVANTAGES OF MINUTES
- Minutes direct officers to take actions.
- They serve as proof that the board gave its officers the authority to take actions necessary for the business.
- In the event of litigation, the minutes can be used as evidence in support of corporate defences, such as due diligence and business judgment.
- They can also establish that a lawyer was instructed to start a lawsuit.
DISADVANTAGES OF MINUTES
- Except in rare circumstances, minutes are not privileged. As such, if they are considered relevant to a case, the minutes will have to be produced to any adverse party in a lawsuit or a regulatory proceeding.
- An adverse party can use your minutes to show that insufficient steps were taken to establish a corporate defence you may wish to put forth.
- Minutes can be problematic in a lawsuit if there are contradicting notes or other evidence from the same time period.
CAUTIONARY POINTS REGARDING MINUTES
- Consider interpreting your minutes from the perspective of an adverse party in a lawsuit and then write your minutes accordingly.
- While accuracy is important, you have to have flexibility in deciding what to include.
- Ensure that the person writing the minutes is trained. Leaving it to an inexperienced administrative assistant is not wise.
- Record that a decision was made, but do not forget to include the process and discussion surrounding how that decision was ultimately reached.
- There is no need to transcribe what was exactly said and by whom. A general record of the discussions and comments made is enough. Meetings discuss issues that are quite preliminary and not well-thought out, leading to members making uninformed comments. Having those types of discussions recorded with attribution may be more harmful than good. That being said, there are limited circumstances where having a transcript may be beneficial.
- Make the minutes promptly after the meeting and circulate them for approval. Have the minutes formally approved at the next board meeting.
- Consider making it a policy that upon formal approval, all personal notes of directors made during the meeting are destroyed. Personal notes are not privileged, and in the event of litigation they must be produced. Thus, if inconsistent or contradictory notes of a board member remain available, the benefit of having kept good meeting minutes is defeated.
- Dissent from a decision insulates a director for liability for that decision but you must dissent properly. If you are present at a meeting, or abstain from voting, you are deemed to have consented unless your dissent is recorded in the minutes. You can send in a written dissent to the secretary before the meeting ends or by mail to the registered office immediately after the meeting is terminated. If you were not present, you must mail in your dissent within 7 days of becoming aware of a resolution after the meeting.
People often take minutes of other sorts of meetings as well. These sorts of minutes are generally not regulated by statutes and therefore may not be subject to the same standards as minutes of directors meetings. However, if you have taken minutes they will be producible in litigation so you are well advised to follow best practices in relation to those minutes as well.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
