Why Meeting Minutes are So Important
When your company has a meeting, minutes are imperative. But they also can be a pain. Someone has to type the minutes, and do so accurately, to reflect what was said and decided at the meeting, and then they have to be approved. If there’s disagreement over the accuracy of the minutes, that can create problems.
So why have them? Do they really serve any kind of function?
In fact, keeping meeting minutes can provide more benefits than what you probably thought they could. And minutes should be used at any meeting – not just “major” meetings like meetings of the Board or shareholders.
Benefits of keeping thorough and accurate meeting minutes include:
- Protection for owners and officers – in the event that you should ever face a shareholders’ derivative lawsuit or similar lawsuit that accuses you of neglecting your fiduciary duties to the company, minutes can be vital.
Minutes can detail your thought process, and show that the decisions that you came to were made in consideration of all the information and data that you had at the time. Minutes can, in other words, show that you used good business judgement when making decisions about the company’s affairs.
- Protection of your decisions – You can bet that if you make a decision that someone doesn’t like, they may complain that the decision was made in violation of company bylaws or management agreements or in the absence of corporate formalities.
But minutes show who was present, on what date, who attended, and what the vote was—all things that can show that the meeting, and decisions made in that meeting, were in compliance with company policy.
- Tax benefits (and protection) – Often, the IRS will want to make sure that expenses or expenditures or income, was in the category or classification that you said it was when you filed your taxes.
So, for example if you write off a trip to Vegas as a business expense because you’re conducting business research, it is a lot more believable to the IRS when the trip was approved at a prior meeting, and when the purpose of the trip was discussed or approved at that prior meeting, all things that can be shown by having accurate meeting minutes.
- Company value – If you ever want to sell your company, or appraise it, or do anything that requires determining your company’s value, good and accurate meeting minutes can increase that value. Minutes can show that your company is organized, and that it does things “by the book.” It can also show active and involved directors or investors or shareholders.
What Not to Include
Remember while meeting minutes should be detailed, never describe in detail anything that you wouldn’t want someone to see in a lawsuit or other disclosure. That includes sensitive financial information, discussion of trade secrets, confidential information, or detailing attorney client privileged information.
Let us help you run your business the safe and legal way. Let the West Palm Beach commercial litigation attorneys at Pike & Lustig help you.
