So your company needs to draft minutes, but you aren’t quite sure where to begin your journey. What should be written down and what can be left out? Does it matter?
Answering these questions is critical to helping your company accurately draft minutes. In fact, drafting minutes incorrectly can lead to legal headaches for your organization. Even seemingly small decisions can become big problems left unattended to.
To help you sort through the somewhat chaotic world of drafting minutes, we’ve outlined a few simple guidelines to follow. This is part I in a two-part series, so be sure to follow along to start drafting your minutes accurately and according to the law.
Drafting Minutes, What to Consider
Minutes hold a special legal status, form and substance matter. Minutes should be worded in simple, clear and unambiguous language. They should convey when action is taken, as well as when it is rejected, or merely considered.
Minutes must be sufficiently detailed to demonstrate that all applicable fiduciary duties have been satisfied. Also, minutes should contain sufficient detail for clarity in the future. For example, if a decision is made not to develop a new product line, some explanation as to why the decision was made should be included in addition to recordation of the vote rejecting the idea and who voted for, against the proposition, and who abstained.
Consideration should also be given to whether the information recorded could harm the company in the future, and should show if legal consultation was sought and followed.
Making Sure Your Minutes Are Valid
To be valid, your minutes must at a minimum be in writing, and contain:
- The name of your company
- The date, time and location of the meeting
- The time the meeting started
- A statement of whether the meeting was held pursuant to notice or a waiver of notice
- That quorum was present, and list who was present in person, by proxy, and who was absent
- The names of everyone in attendance, and their individual role, and the method by which each person participated in the meeting whether in person, by video conference or by phone
- The name of the person who called the meeting to order
- The name of the meeting’s chairperson (the person who ran the meeting)
Minutes must also include a concise account of every matter considered at the meeting. They should record not only what decisions were made but must also include all procedural steps which lead up to a business decision. They should note that a matter was raised, and who raised it. When appropriate, the minutes should summarize discussions held, noting what agenda items were discussed. Decisions involving higher risk require greater detail. Minutes must also record whether a vote was called, and record not just the results of the vote but who voted in favor, against and who abstained.
When done correctly, corporate minutes serve as an irrefutable legal record of corporate actions. Minutes can thereby confirm that fiduciary duties have been satisfied, and that corporate actions satisfy the business judgment rule. Absent a decent account of what happened, minutes cannot accomplish this goal.
Exploring Other Concerns
We’ve covered the basics of Drafting minutes in this article, but there is much more to consider to record your minutes accurately. In part II of this series, we’ll discuss who needs to receive copies of the minutes, what it means if companies knowingly or unknowingly falsify their minutes, and how you can avoid that disaster.
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