High-profile claims against directors demonstrate the crucial role corporate minutes can play in memorializing the adequacy of board and committee deliberations and compliance with fiduciary obligations. Consider these best practices when preparing and maintaining corporate minutes.

Reflect the Deliberative Process 

How can minutes best reflect a careful, deliberative process? Here are some suggestions:

Scope of discussion.  Capture the substance of inquiry and response without taking a “who said what" approach.  For example, the minutes could reflect that “members of the audit committee then asked specific questions, and the CFO responded in detail, concerning the assumptions and estimates made in preparing the financial statements.”

Time devoted to discussion.  Consider showing the real time devoted to agenda items in the minutes. Consider saying things like, “the board then discussed this matter at length" or even referring to the amount of time spent.

Information and documents presented and considered.  Time devoted to a topic or depth of discussion may not be the key to understanding the board’s care.  Sometimes, it is the quality of the information provided and presented to the board that makes detailed discussion and Q&A unnecessary.  In these circumstances, the full meeting record should be clear as to information and material presented to the board, and if documents were provided for advance consideration.

Reliance on advisors. Reflect participation by advisors (legal, financial, accounting, tax, compensation) and whether the board or committee relied upon the advisor’s report, advice or opinion.

Write Well and Edit

Principles of good drafting applicable to contracts or other legal writing also apply to drafting minutes. Use concise, unambiguous language to avoid having a court look to other sources for clarification, explanation or definition.  Ensure that the minutes are accurate and complete, consistent in language and approach and free from unnecessary information or potential traps. Eradicate stupid mistakes (like indicating the presence of an absent director or vice versa) that call the entire record into question. Use neutral language and stay away from adjectives or adverbs reflecting your own value judgments.  Avoid confusion by using all words in their ordinary and normal sense. 

Don’t Record Meetings or Transcribe Who Said What

Minutes should summarize, rather than transcribe verbatim, what occurred at a meeting. Minutes generally should not reflect who said what, and, instead, should more generically refer to discussion between directors and other participants in the meeting.  Audio or video taping a meeting is a particularly bad idea. The presence of recording equipment may chill a healthy exchange of information.  In addition, comments made in the ordinary give-and-take of a board meeting may prove embarrassing or harmful later when taken out of context.

Set Clear Document Retention Policies 

Companies should set clear document retention policies for meeting notes, board packages and related documents, and directors should be fully informed (and periodically reminded) of these policies. Notes of individual directors or other attendees and draft minutes should not survive once final minutes have been approved. The best practice for many companies is either to have only the meeting secretary keep notes or to collect and destroy the notes of meeting participants at the end of the meeting.  Generally, the final minutes (as kept in the official minute book), together with a clean copy of the official board package and any other materials specifically referred to in the minutes, should be the only permanent record maintained by the company.

Conclusion

Excellence in keeping corporate minutes not only ensures that an accurate record of corporate actions exists, it actually improves corporate governance.  The process of producing an accurate, precise and complete record of director decision-making and oversight imposes a discipline on the process that drives better preparation, engagement and careful consideration every step of the way.

This article originally appeared in the November 2005 issue of the Minnesota Business magazine.