Corporate meeting minutes are usually required to be kept under state corporation statutes, your articles of incorporation, or your bylaws. The minutes are a record of the proceeding at shareholders', directors' or committee meetings. Minutes contain the historical account of actions taken, resolutions adopted, elections and other official orders of important corporate business. Usually the corporate secretary has the duty to record the minutes; however another officer could be delegated this responsibility. Check your corporate bylaws, articles, operating agreement or other governing instruments for the specific details in your small business corporation, limited liability company (LLC) or professional practice.
Keeping accurate minutes is a good idea aside from any official requirement to do so. The minutes are an important part of corporate governance and observing corporate formalities. They are part of the company's records and they reflect its memories, mindset, intentions and actions. They are written evidence of what actions were taken; why an action was taken, who took the action and by what authority; wether or not the action taken was proper or "legal"; and, among other things, when the action was taken.
When minutes are thorough and accurate, they can serve to avoid future conflicts, and be used as documentation in litigation, tax audits and more. They also can be a reference for clarification to shareholders and directors who may be required carry out certain duties as a result of an action set forth in the minutes. For example, if the directors adopted a resolution in the company minutes authorizing a bonus to employees who remain employed by the company for the entire year, a former employee may not be entitled to that bonus because she quit before the end of the year. Or, if a corporate asset was transferred to a shareholder for full value exchanged, a subsequent corporate creditor cannot have the transfer set aside where the minutes reflect the transaction was made for full consideration.
Corporate meeting minutes are can be powerful.
- They are presumed to be correct. (Young v Janas, (1954) (Del. Ch.) 103 A. 2d 299);
- They are prima facie evidence of the facts they recite. (Santa Fe Hills Golf and Country Club v Safelic Realty Co., (1961) S. Ct. Mo., 349 S.W. 2d 27, and other cases);
- Together with the bylaws, minutes are the highest proof of the powers of the corporate officers. (Gentry-Futch Co. v Gentry, (1925) 90 Fla. 595, 106 So. 473); and
- Minutes are the best evidence of the events or decisions they record. (American & British Mfg. Corp. v New Idria Quicksilver Mining Co., (1923) 293 F. 509, and other cases.)
"Correct." "Prima facie evidence." "Highest proof." "Best evidence." That's mighty strong stuff. If corporate meeting minutes are the "best" evidence of corporate events and decisions, what evidence is better?
Small companies, even one-person entities, are entitled to the same tax and legal benefits of the large companies and firms. However, small companies are also held to the same standard of corporate governance as the large companies and firms. They still must observe corporate formalities: hold meetings, adopt resolutions, and record minutes. The best part is, those chores can be systematized without too much effort if you just know how it works - or someone who does.
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