Keeping minutes of board meetings is tedious and 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.
There are many advantages of taking minutes including that they serve as proof that the board gave its officers authority to take action, they direct their officers, they can establish that a lawyer was instructed to start a lawsuit and in the event of litigation, minutes can be used as evidence in support of corporate defences such as due diligence and business judgement.
There are also disadvantages to taking minutes including that in most circumstances, minutes are not privileged. An adverse party in a lawsuit can use minutes to show insufficient steps were taken or that there are contradicting notes or evidence from the same time period.
Here are some cautionary points regarding minutes:
- Consider interpreting your minutes from the perspective of an adverse party.
- Accuracy is important but be flexible in deciding what to include.
- Ensure that the person writing the minutes is trained.
- Record that a decision was made, but also include the process and discussion surrounding how that decision was reached.
- There is no need to transcribe exactly what was said and by whom.
- Make the minutes promptly after the meeting and circulate them for approval.
- Consider making it a policy that upon formal approval, all personal notes of directors made during the meeting are destroyed.
- Make sure dissents are recorded properly.
Minutes are all producible in litigation so you are well advised to follow practice and procedure to do it carefully and properly.