No matter how your company holds its meetings, whether in a luxurious conference room or in the breakroom over a cup of coffee, accurate recordkeeping is essential. Minutes of corporate meetings can be like a spare tire for your car – easy to forget about until you get a flat and discover it’s not there. Minutes of a corporate meeting may seem unnecessary until they are needed to defend against a lawsuit by a creditor attempting to hold a shareholder liable for a company obligation.
Preparing accurate minutes need not be a burden for your business or for the person responsible for taking notes at meetings. Here is a look at how minutes of meetings may be of use to avoid legal problems for a business along with some tips to make taking them less of a burden.
California corporations must keep adequate and correct records to comply with state law. This includes keeping minutes of shareholder and board of director meetings. Minutes of meetings must be kept along with other records of the business in a paper or other format.
Minutes documenting actions taken by a company’s ownership and management serve purposes other than maintaining compliance with state law. Other reasons for keeping an accurate record of meetings include:
- Proof that activities undertaken by a company are consistent with the decisions of its owners and management. For example, a lawsuit by a shareholder claiming a corporation acted without authority may be defended with the minutes of a meeting proving the action was taken in the regular course of business with the approval of the board or the shareholders.
- Proof that the ownership and management of a corporation adhered to sound business practices consistent with operation as a corporate entity. For example, presenting an auditor from the IRS with a complete set of corporate records that include minutes of all meetings of shareholders and the board demonstrates that the owners and managers of the business were consistent in how they ran the business.
- Memorializing discussions and how people voted on key issues pertaining to the operation and management of the business. Memories of what was said or voted upon at a meeting fade over time, but accurate minutes taken during a meeting remain as proof of what actually took place.
It is essential for minutes to be kept during a meeting and not prepared later from memory or by piecing together notes taken by multiple parties who were present. Their value as a record of what took place is enhanced when the person responsible for taking minutes did so contemporaneous to the meeting, or at least kept shorthand of the meeting minutes, to be later expanded.
The person assigned the task of creating the minutes of a meeting should be someone with good note-taking ability. If these minutes are incomplete or inaccurate it may thwart the credibility of the meeting minutes entirely. It helps if an agenda or outline of the topics to be discussed at the meeting is prepared and circulated in advance to all attendees and used by the person preparing the minutes as a guide. Sticking to the agenda makes the note taker’s job easier and usually improves accuracy of the minutes. Other tips for creating accurate minutes of meetings include:
- The note taker can use the printed agenda, which should include the date, time and location of the meeting, to record the names of all people in attendance.
- Minutes are not verbatim transcriptions, so focus on taking notes summarizing discussion points raised by each speaker rather than writing down everything participants say.
- Actions taken at the meeting should be noted along with the results of votes taken authorizing those actions.
- The person responsible for the minutes should not hesitate to ask someone to clarify or repeat something they said in order to ensure accuracy in the minutes.
Using a recording device or an app for your smartphone to record the meeting offers a safety net in case the note taker misses something during the meeting or wants to verify the accuracy of their notes. It should be a backup to the notes taken by the person assigned the job of preparing the meeting minutes and should be preserved along with the minutes. And, it should be done with the consent of each and every person in the room.
Ensuring that your company complies with legal requirements for meetings and preservation of accurate minutes of them need not be a burden. The business attorneys at NM Law have experience providing legal advice and representation to help business owners remain in compliance with the law. Call them today at (949) 253-0000 to schedule an appointment.
Disclaimer: This article is intended to provide a general summary of laws in the State of California and should not be construed as a legal opinion nor a complete legal analysis of the subject matter. Noelle Minto is an attorney at NM Law, APC in Tustin, California, a law firm specializing in Trusts & Estates and Business Transactions.