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A CREDIBLE MINUTE BOOK
The Prudent Thing to Have		 CLICK HERE to download sample minutes (Word file)

OBJECTIVE:

The whole point of the minute book is to protect individual directors from personal liability in the event that they are ever named as co-defendants in a lawsuit filed against the corporation. As long as the 'corporate formalities" are observed, the courts will not allow creditors to "pierce the corporate veil" and hold individual directors personally liable for corporate debts. The minute book is used to prove that the corporate formalities were followed:
    Observing the "corporate formalities" means:

    • Complying with all requiremetns of the bylaws
    • Having all corporate actions properly authorized by the board of directors
    • Preparing concise minutes of each directors meeting
    • Keeping an credible minute book

KEEPING MINUTES - Click here to download sample minutes
  • Keep minutes sparse. Limit them, for the most part, to a record of formal votes that were taken

  • In documenting the votes taken at particular meeting it might be occasionally necessary to include some introductory remarks to provide background information BUT avoid including a summary of the discussion that took place prior to the vote (because it might later be mistaken as actions of taken at the meeting)

  • The minutes should not be a substitute for the corporation's newsletter.

  • The threshold for inclusion in the minutes, perhaps, is when someone makes a motion (whether or not the motion was "seconded").

  • Be sure to state whether the motion was seconded. Don't state the the name of the directors who made and seconded the motion, but, identify any directors who voted against the motion or abstained. If the corporation were ever sued directors named in the minutes would become more likely to be hauled in for depositions by the opposing lawyer.

  • A standard item on the agenda of each and every board meeting should be the adoption of minutes from prior meetings. A particular document is not actually the "minutes" of a meeting unless and until the directors have voted to adopt it as such.

  • A sign-in sheet should be attached to the minutes of each meeting so that you can later prove that a quorum was present

  • Avoid making tape or video recordings of meetings. If the corporation is ever sued such recordings may become the target of court sanctioned "discovery" by the opposing lawyer making it more likely that the individual directors will be hauled in for depositions. Despite this, if recordings of meetings are to be routinely made the directors, at a minimum, should adopt a formal policy requiring that all such recordings be destroyed after 30 days.

WHAT IS A "CREDIBLE MINUTE BOOK

A minute book should look like minute book. The minutes should be collected into a three ring binder, the minute book should contain a complete paper trail of every board meeting that was ever held from the very beginning until the present.

MEMBERSHIP ROSTER:

Under Florida law a nonprofit is not required to have a "membership". If they DO have a membership the bylaws may or may not give them the power to elect and remove directors. If the bylaws call for a "membership" Florida law requires that there be a "roster" kept at the back of the minute book stating the name and mailing address of each member.

DOCUMENTING THE COMPOSITION OF THE BOARD

If the bylaws specify a term of office for directors make sure that the board's calendar has the expiration dates noted so that those terms are not forgotten and ignored

There should be documentation in the minutes with regard to director resignations and the appointment or election of new directors. Each time such a notation is included in the minutes there should also be included a listing of the updated current composition of the board (along with the remaining term of each if relevant). Doing this will provide documentation in the minute book for the "chain of authority" of the current board running from the present day back to the date of incorporation.

CORPORATE CALENDAR.

The board of directors should keep a calendar showing each important date in the bylaws (such as when elections are to be held, dates when notices need to be send, when nominating committees need to be appointed, when terms of office expire, etc.). The calendar should be brought to each meeting of the directors by the corporate secretary so that it can be updated contemporaneously.