Ten Things: Preparing Board of Director Meeting Minutes

From the desk of attorney Sterling Miller:

Preparing board meeting minutes is another one of those tasks that no one really teaches you how to do, you just kind of figure it out.  Or, at least, that’s how I learned.  My learning method was pretty simple, when I first stepped into the role of corporate secretary I looked at the minutes of the last year of board meetings prepared by my predecessor and kept what I liked and discarded what I didn’t like – guided mostly by common sense.  I also found a few publications on proper board meeting minutes and read those (some of which are noted later in this post).  That’s it.  Over the years, I learned a lot about drafting board meeting minutes, mostly on what not to do because you could fill a file cabinet with all of the different advice on what to do when drafting minutes (and who needs another file cabinet full of crap?).  Anyway, since you all asked so nicely, this edition of “Ten Things” discusses my thoughts on how to prepare proper board of directors minutes:

1.  Why it matters.  On the most basic level, minutes provide a written summary of the key information, discussion, and actions taken at a board of directors meeting. You have two goals when drafting minutes: (a) summarize what happened at the meeting, and (b) don’t write anything so stupid that it shows up as Exhibit A at trial.  Most lawyers are pretty good at (a) and surprisingly bad at (b), myself included.  Why?  Because we cannot resist the urge to write down more than is necessary.  And the more you write, the more likely Exhibit A is in your future.  Consequently, drafting minutes is all about balance and the ability to write down just enough to protect directors from liability by providing a record of the discussion and decisions with a sufficient level of detail so that the Business Judgment Rule kicks in. This means that the minutes show that the officers and directors of the company made decisions that they believe, in good faith, to be in the best interests of the company, after appropriate due diligence, care, and thought.  The rule protects officers and directors even if the decisions turn out to be pretty terrible.  Since the minutes are the official record of any board meeting, it is important that they reflect “how” the directors and management exercised the appropriate level of diligence, care, and thought over issues facing the company.  Easy, right?  Nope![1]  But, fortunately, most business at a board meeting is pretty routine so the times when you need to be really on your toes are infrequent – but you need to recognize them when they do arise.

2.  What do you need to capture?  For good or bad, there are no hard and fast statutory rules about what board of directors minutes must say and how it must be said.  But, given the goals noted above, there are some things you should include.  In large part, you are looking to capture any significant actions of the board, e.g., elections of officers and directors, committee reports, management presentations, special business, resolutions, and similar items.  There are also a lot of “basic” items you should capture as well, including:

• Type of board of directors meeting (regular, annual, special).
• That advance notice was given and the meeting was called to order.
• Names of the attendees (including those board members who could not attend), who is presiding, and who is taking the minutes.  Any guests, experts, management members should be noted as well.
• That a quorum of directors was present.
• That materials (if true) were provided to the directors in advance of the meeting, including any material resolutions in draft form.  Also, note any new substantive materials provided to the directors during the meeting.
• A copy of the agenda distributed in advance of the meeting (or any amended agenda distributed the day of) usually as an attachment to the minutes.
• Start time, date, place of the meeting.
• The general nature of any substantive discussions.
• Actions and resolutions approved by the board.
• Copies of any resolutions voted on by the Board (or the exact wording of the resolutions included in the body of the minutes).
• Any executive sessions.
• The time the meeting ended and the date of the next meeting.