As the end of the year approaches, there are many things on a business owner’s plate that must be addressed. And while it may sound mundane, meeting minutes are one of them. Making sure proper minutes have been taken at meetings is critical for proving accountability, transparency, and legal compliance.
Whether you’re an accountant making sure your clients are compliant or a business owner looking after your own concerns, it’s important to know about meeting minutes, which companies need them, how often they’re needed, and the details of what needs to be included.
Why Meeting Minutes Matter
Meeting minutes record the numerous discussions, decisions, and actions taken during formal corporate meetings, such as board or shareholder meetings. While taking minutes may appear to be mere administrative tasks, meeting minutes have crucial uses for businesses, including:
- Legal Compliance – Meeting minutes are instrumental in proving a company’s adherence to its legal and regulatory obligations. They provide evidence that meetings were conducted fairly and pivotal decisions were made with due diligence.
- Accountability – Minutes are key to holding meeting participants accountable for their actions and commitments. They are a reference point indicating who agreed to do what and by when—so the likelihood of disputes or misunderstandings is diminished.
- Historical Documentation – Essentially, meeting minutes become the historical record of the company’s decision-making process, offering invaluable reference points for future audits, legal proceedings, and business continuity.
Not every company has to maintain meeting minutes, but certain business entities should prioritize them. Generally, companies structured as corporations, LLCs, or nonprofits need to keep meeting minutes for the following reasons:
- Corporations – Both publicly traded and privately held corporations are legally obligated to keep meeting minutes of all board of directors and shareholder meetings.
- Limited Liability Companies (LLCs) – While LLCs enjoy more governance flexibility, it’s still essential that they maintain minutes to document significant decisions and safeguard the limited liability status of their members.
- Nonprofit Organizations – To preserve their tax-exempt status, nonprofits must typically keep meeting minutes.
How Often Do Companies Need to Take Meeting Minutes?
The frequency of maintaining meeting minutes varies depending on the company’s bylaws and state regulations, but there are some standard guidelines:
- Board of Directors – Typically, corporations are required to record minutes at board meetings, which are typically held quarterly. However, the specific frequency can vary based on the company’s particular needs.
- Shareholder Meetings – Most corporations are required to hold shareholder meetings annually, but many have them more often. While minutes are not required to be taken at every shareholder meeting, it is advisable to document the proceedings, especially during the annual meeting where critical decisions, like electing the board of directors, are made.
- Committee Meetings – This doesn’t apply to all businesses, but if your company has corporate committees, like an audit or compensation committee, it’s advisable to document these meetings as well.
Key Elements in Meeting Minutes
Meeting minutes need to be comprehensive and accurately reflect the discussions, decisions, and actions taken during the meeting. Here are the crucial elements that should be included:
- Date, Time, and Location – The minutes should start with the fundamental meeting details.
- Attendees – List the names of all meeting participants, including board members, shareholders, and committee members.
- Agenda – To provide context, include a brief overview of the meeting’s agenda.
- Discussion – Summarize key discussions and debates, especially any significant points made by participants.
- Decisions – Document all formal decisions, resolutions, and motions made during the meeting.
- Action Items – List all tasks assigned to attendees (or others not in attendance), along with deadlines and responsibilities.
- Voting Results – The results of all votes, including the number of votes for and against, should be recorded.
- Signatures – At the end of the meeting, the meeting’s chairperson and the secretary who prepared the minutes should sign and date them.
In addition, by stressing the importance of integrating meeting minutes with financial records and annual reports, your clients are assured financial decisions, such as dividend distributions or capital expenditures, are accurately reflected in both financial statements and meeting minutes.
Note to Accountants: Accountants are essential for guiding clients through the various financial and administrative aspects of running a business. And, advising them about maintaining accurate meeting minutes is a valuable service your accounting firm can provide. Understanding the state and/or federal laws that mandate keeping minutes for certain business entities, such as corporations and LLCs, is vital. Accountants can educate their clients about best practices for maintaining accurate and comprehensive meeting minutes.
Need Help Managing Your Meeting Minutes?
With every formation, CorpNet™ provides you with Corporate Minutes and Bylaws documents that you can customize to your needs. Should you need additional or stand-alone documents, place your order for minutes and bylaws documents customized for your company by calling or using the easy online form.