Among the many elements of corporate housekeeping and compliance that demand the time and attention of directors and officers (and staff), minutes often seem like a burden. No one doubts that minutes matter. A well-documented board meeting creates an important historical record that can guide future deliberations and may prove useful during Board disagreements, litigation, Attorney General investigations, other governmental enforcement actions, or an audit by the IRS. However, clients often nervously ask whether there is a legal standard regarding how much detail minutes should contain. Although some organizations favor minutes that transcribe the meeting in all its tedious and sometimes bloody detail, others simply enumerate the actions taken at the meeting. The better practice, however, lies somewhere in between. Minutes can be thought of as strategic documents that can reflect and reinforce an organization’s strategic priorities and goals. In this regard, they should be cognizant of (and speak to) key regulatory and oversight considerations and audiences, be mindful of potential litigation exposure, and be concise and to the point.
Journalists are taught that a news story needs to answer five questions: Who? What? Where? When? Why? These “5Ws” provide a useful framework for how minutes should be handled.
Who: Minutes should always list who is in attendance and in what capacity (e.g., invited guests and their professional affiliation). If directors, officers or employees attend only a portion of a meeting, the specific portion should be noted too.
What: Minutes should describe what subjects the Board (or committee) discussed and provide a sense of the Board’s deliberation. Effective minutes should reflect the agenda and any actions that were taken during the meeting. If the Board received presentations from staff or outside advisors (such as lawyers or investment managers) those presentations should be noted and their key elements summarized, but need not be described in exhaustive detail. References to comments by legal counsel should be reviewed from the standpoint of privilege and confidentiality, and it is generally advisable for counsel to review any portions of minutes where legal topics are referenced.
Where: Minutes are generally not public documents. Unless disclosure is required by law (for example, under New York’s Open Meetings Law or federal “sunshine laws” which apply to certain nonprofits) minutes should be maintained as confidential and housed in a secure location (whether in physical form or online). This is consistent with the general (and too often disregarded) fiduciary duty that directors have to maintain the confidentiality of Board deliberations. Minutes generally should not be circulated to non-directors or staff. If any slide presentations or ancillary documents are referenced in minutes, those documents should also be saved with the minutes. In addition, organizations may wish to house executive session minutes separately from ordinary minutes.
When: Minutes should be written and approved in a timely fashion. Memories fade and the more rapidly the minutes are written and approved, the more credible the record may be. In addition, certain federal and state regulations require the creation of a contemporaneous record. For example, the rebuttable presumption of reasonableness for compensation decisions under Section 4958 of the Internal Revenue Code requires adequate and contemporaneous documentation through minutes.
Why: Minutes generally should succinctly explain the reasons key or complex decisions are made, but they should not read like a screenplay. Unless directors or officers request that particular statements be included in the record, it is fine to broadly summarize the matters discussed, topics addressed and questions asked. Avoid elaborate “he said, she said” recitations. As a general rule: don’t put any detail in minutes that you wouldn’t want to read in the papers later.
In the end, like a good newspaper article, minutes should answer the 5Ws—no more and no less.