Regardless of the size of the business, corporations (including those organized under Subchapter S) must observe all of the required formalities in order to maximize the benefits of a corporation. Corporate meeting minutes document the decisions made by the company’s board of directors, and are necessary to preserve the “corporate veil” in the event of a lawsuit or other claim against the company. If corporate formalities are not observed, your own personal assets may be at risk.
One such formality is the maintenance of a corporate record book containing minutes of meetings conducted in accordance with the company’s bylaws. Even in a one-person corporation, board resolutions must be drafted, signed and kept in the corporate records. Every major decision that affects the life of the business must be ratified by a board resolution contained in the corporate records.
There is no specific required format for meeting minutes, but the document should include any important decision made regarding the company, its policies and operations. Minutes should include, at a minimum:
- Date, time and location of the meeting
- Names of all officers, directors and others in attendance
- Brief description of issues discussed and actions taken
- Record of how each person voted, whether the vote was unanimous and whether anyone abstained from voting
- Vote and approval of the prior meeting’s minutes
How do you know whether a decision needs to be documented in the meeting minutes? Generally, if a transaction is within the scope of the company’s ordinary course of business, it need not be addressed in the minutes. On the other hand, major decisions should be documented in the minutes, such as:
- Significant contracts
- Marketing campaigns
- Reorganizations and mergers
- Employee benefit plans
- Elections of directors or officers
Non-incorporated entities such as limited liability companies are generally exempt from performing such formalities.