In Part I of this two-part series, we discussed the wording, style, and content that should be included when drafting corporate minutes. In the second part of this series, we’ll take a closer look at the ideas we left out, the exact format you should follow, and the legal implications of failing to follow these suggestions.
Don’t worry, you can draft your minutes without breaking a sweat, and the information here can serve as guideline to help you.
Drafting Minutes; What Changes Qualify?
It is as much an art as science to decide what to include in your minutes. Include everything which involves a fundamental change to the company. Fundamental changes include, but is not limited to:
- A major change in corporate structure
- A change in management or management structure
- A change in business operations
- The engaging activity outside the ordinary course of business
- Any distribution to shareholders or members
- An amendment to the corporation’s corporate documents
- The purchase, sale or transfer of the securities or assets
- Any significant tax consequences to the corporation, its employees or shareholders
Template for Recording Resolutions
The exact wording of the resolution, the names of proposers and seconders and the names of those voting in favor, against, and who abstained must be listed. The outcome must also be recorded using the following format:
“The Chairperson called the next item on the agenda, authorizing taking a $500,000 short term loan. A resolution and the loan documents having already to forwarded to the Directors for review, a short discussion was held.
It was then moved by John Doe, seconded by Zoe Zoe, and a vote was held, the results are:
John Doe Voted in favor
Jane Doe Voted against
David Doe Voted in favor
Zane Roe Abstained
Zoe Zoe Voted in favor
RESOLVED, that majority of the Board having voted in favor of accepting the aforementioned loan(s) from Citibank, the Board authorizes entering into the loan agreements and directs the Secretary to place copies of same in the Corporate Minute Book.
The Importance of Revising Minutes
Remember that officers, directors, managers and employees who knowingly falsify corporate minutes may be civilly liable to the corporation’s owners. It is therefore a good practice to review and revise the Minutes after each meeting to ensure there are no material mistakes or omissions.
After drafting, reviewing and making revisions, the minutes should be presented to the directors, managers, shareholders or members for their review and approval at the next official corporate meeting. It is also good practice for the Board of Directors, shareholders, managers, and members to meet regularly.
Drafting minutes involves recording resolutions, including the correct information in your minutes, ensuring that the necessary individuals have signed and agreed to the information presented, and of course filing the minutes correctly. The latter is a bit trickier.
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