Corporate meeting minutes are a formal record of your company's important discussions and actions. They can and should be more than a formality—they can help you keep your company's tax standing, avoid or settle disputes, and even aid in getting the best price when you decide to sell your business.
Corporate meeting minutes, or meeting minutes as they are often referred to, are a record of discussions held and actions taken during shareholder meetings, board of director's meetings, and board committee meetings. They document important decisions such as the appointment of officers of the company or the election of board members, real estate purchases, the adoption of a pension plan, the sale of stock, and many other activities.
Most states require S-corporations and C-corporations to take meeting minutes whenever the company's shareholders or board of directors meet, usually once a year for shareholder's meetings and once a year for director's meetings. (Delaware, Kansas, Nevada, North Dakota, and Oklahoma don't require minutes.) Your company charter, articles of incorporation, or by-laws might require more frequent meetings, and if that's the case, you'll need to document those meetings as well.
Minutes serve as a record that explains when and why decisions were made or actions were taken, and they show that the shareholders or board members were informed about the issue and agreed to the decision. Even when you are not required to do so by law, it can be a good idea to take meeting minutes to protect your tax standing (more on this below), avoid internal disputes, and show potential buyers that your company has been managed responsibly and professionally.
Some of the reasons to keep meeting minutes, besides legal requirements, include:
Memories are short, and hindsight is always 20/20. A shareholder or board member might not remember what was agreed upon or have a change of heart about an important decision made weeks or months ago. The consequences are minor if someone forgets a routine decision like bringing a new vendor on board. But the stakes are much higher if, for example, the shareholders agreed to take on a $1 million loan and one or several of them believe the loan approved was half that amount—or not approved at all.
Safeguarding your personal liability protections. When your business entity is structured as a corporation, LLC, or certain types of partnerships, the individual owners are protected from personal liability for the business's debts, bankruptcy, or lawsuits. But those protections (known as the corporate veil) can be removed, and creditors and courts can go after individual owners, if the company can't show it followed the rules for keeping the business separate from the individual owners. Though other factors might be considered, meeting minutes are one way to show that decisions and actions were taken for and by the business, rather than the individual owners.
Keeping your company's tax standing. If your company is audited, the IRS will check to see whether you've followed the tax rules for your business entity classification. The IRS can reclassify your business in a way that changes your tax rate if you haven't been diligent. Suppose, for example, that the IRS looks at expenses your LLC claimed for travel to check out real estate you were thinking of buying. Meeting minutes that included a decision to investigate the property would help you show that the travel expenses were in fact related to the business of the LLC.
Attracting investors or boosting your sale price. Meeting minutes give investors and potential buyers a peek into the way your board of directors manages the company. Showing investors how and why the board makes decisions will build their confidence. If you are selling the business, a paper trail of regular and documented meetings will help support a good price.
You don't have to include everyday, routine decisions, such as buying office furniture or hiring employees, in your meeting minutes. In general, you'll want to include decisions that require the approval of the officers of the company or the board of directors, but your by-laws might require you to include other types of decisions as well. Examples of the decisions or actions that you should include are:
In large companies, the secretary of the corporation usually takes the minutes. But if your company doesn't have a secretary, you should designate another person to do it.
It's a good idea for the designated minutes-taker to obtain a copy of the meeting agenda in advance, and to follow the agenda items when taking minutes. Consider using a template like the one shown here to keep your minutes consistent and easier to produce.
In general, minutes should begin with the housekeeping aspects of the meeting:
For each agenda item, minutes should include:
Meeting minutes don't have to include everything that was said, but they should show that each item was carefully considered.
Minutes should present the pros and cons raised during the discussion, but specific references to who said what should not be included.
It's not a good idea to record or video-tape meetings, even if you are also taking written minutes. A full accounting of what was said during a meeting can prove embarrassing later, and individuals might be reluctant to voice their opinions when they know they are being recorded or taped.
Attorneys asked to make presentations at meetings are bound by confidentiality. Any privileged information they share with meeting attendees should not be included in the meeting minutes, because those minutes could be distributed to third parties.
Once the minutes are completed, distribute them for review to all the meeting participants. If your company operates with board committees, you might also consider distributing committee meeting minutes to the full board of directors, because the committee is acting on their behalf.
You're not required to file meeting minutes with the state, but you should maintain them in a secure location along with your other important documents, such as articles of incorporation. It's a good idea to keep minutes for seven years in the event of an audit. Companies whose exit strategy is a sale might want to keep minutes for a longer period.