What are the legal requirements for board minutes?
The answer to what the legal requirements are for board meeting minutes is that there are not very much! There are a few federal regulations for corporations, but for the most part, the federal government gives authority for governing corporations to the states. Publicly listed corporations also have to pay attention to security rules and regulations. States give corporations a limited amount of authority to govern themselves. One area where states give corporations some ability to govern themselves is with how they choose to record their minutes.
While corporate boards retain some flexibility about how they record meeting minutes, best practices for governance offer some degree of guidance on how best to record minutes so that they contain the proper documentation for corporations currently and in the future. Minute-takers get to decide the degree of detail that they include in board meeting minutes. The details they choose to include can be highly instrumental in helping or hurting corporate boards.
Do All States Require Corporations to Keep Minutes?
All states have passed laws that pertain to nonprofit corporations, for-profit corporations and other types of organizations. Most states have laws on the books that require corporations to keep meeting minutes with other corporate documents and records. A handful of states leave the responsibility for recording and retaining minutes up to the corporations. Those states are:
- North Dakota
How Good Minute-Taking Helps Corporate Boards
The purpose of meeting minutes is to memorialize key information. When problems, concerns or issues arise long after a meeting ends, meeting minutes stand as a record of board actions and decisions that occurred in chronological order.
Unfortunately, issues with the board's actions and decisions don't always surface right away. In fact, questions and problems can occur many months or even years after a board thinks matters are settled. By the time groups or individuals are asking to see copies of minutes, many people have forgotten what took place. If a group or individual were to challenge the actions of the board legally, the courts would rely on whatever is in the minutes, good or bad, in rendering a judgment. Minutes that are too vague won't give courts the evidence they need to rule in the board's favor, even when board directors made decisions that are prudent and responsible.
The IRS is another governmental agency that may challenge board minutes as they pertain to corporate taxes. The IRS may request to see meeting minutes as part of an audit. In this situation, boards will want to be sure that their meeting minutes are accurate, up-to-date and can be easily located.
What Should Minute-Takers Include in the Record of the Minutes?
While there aren't any hard rules or legal precedents for recording board minutes, businesses have provided plenty of templates and examples for other corporations to use. At a minimum, meeting minutes should include the following items:
- Date of the meeting
- Time of the meeting
- Location of the meeting
- The type of meeting ' regular, special, emergency, executive committee
- Whether notice was given
- Whether all directors signed a waiver of notice
- Names of attendees
- Names of absent board directors
- Names and titles of guests
- Whether a quorum was established
- Whether board directors left early or re-entered the meeting
- Board actions ' approvals, resolutions, acceptance of reports
- Rationale for board actions and decisions
- Summary of major arguments
- Statements that support board directors following fiduciary duties
Certain other documents and records don't get recorded directly into the minutes. Financial reports, committee reports and other documents become part of the meeting minutes as attachments.
What Shouldn't Minute-Takers Record for Meeting Minutes?
Some corporations may insist on taking minutes verbatim. Meeting minutes shouldn't read like a narrative. This is a time-staking process, and it isn't necessary. It's also not necessary to record names. In fact, board meeting minutes taken verbatim may distort the board's true intentions. In a court of law, verbatim minutes may reflect poorly on the board.
Electronic solutions for board minute-taking can help make the responsibility for minute-taking responsibility more accurate, appropriate and in keeping with best practices.
Electronic Solutions for Taking Board Meeting Minutes
Rarely does a meeting minute-taker arrive at a board meeting at the last minute with nothing but paper and pen in hand ' at least, we hope not. At a minimum, minute-takers should bring a copy of the last meeting's minutes and a copy of the current agenda with them. These tools will help them stay on track during the meeting. Are you aware that there's a product out there that's even better than a template for minute-taking? Diligent Minutes is a software product that takes all of the guesswork out of minute-taking.
This program also streamlines the process for taking minutes and alleviates many of the problems caused by poor minute-taking.
Diligent Minutes stores meeting minutes safely and securely. In the event of a court proceeding or IRS audit, board members can easily retrieve the correct copies of minutes.
Automatic electronic filing also helps boards comply with required retention policies for meeting minutes. Secretaries or minute-takers take the bulk of the meeting minutes in real time during the meeting. This relieves any worries about drafting or distributing board meetings long after the meeting was held, when meeting discussions are no longer fresh in people's minds.
The software automatically records the time the meeting started and ended. It's easy to build in sections to show compliance with documenting whether a quorum was present. The software automatically prefills much of the standard information, such as the date, time, meeting location and the name of the company. You can even add the company logo, so meeting minutes have a professional look.
The format of the program makes it easy for minute-takers to move around the various sections and to reorder the sections by dragging and dropping them to another location.
Courts may also look at which board members were responsible for certain actions. Diligent Minutes gives minute-takers the ability to assign tasks as those decisions are made during the meeting. Minute-takers can also use the automatic notification feature to track a board member's progress and to get notification when the action items are completed. As with all products by Diligent Corporation, Diligent Minutes offers the best in security features, eliminating any chance for hackers to alter important documents.
What makes Diligent Minutes even more valuable is that the program integrates seamlessly with the Diligent Boards portal.