Why (and How) Do You Maintain a Corporate Minute Book?

Why do you need a minute book?

Whether you have organized your corporation in Delaware, California or any other state, your existence as a corporate entity formally starts once you’ve filed your organizational document with the state authority, typically known as a certificate of incorporation or articles of incorporation. (States differ on what they call this document. Delaware, for example, uses the term certificate of incorporation, also commonly referred to as a company’s “charter”). After this initial document is filed, the company can act only through its board of directors, comprised of individuals who, typically, are initially appointed by an action by the sole incorporator of the company. Elections of officers, approvals of stock issuances and option grants, credit arrangements, changes in authorized share counts, and certain other matters must be documented to evidence proper authorization by the board and stockholders, pursuant to any approval requirements contained in the company’s charter and bylaws. For more details, see our article “What Decisions Need Approval From Your Board of Directors?”

It is extremely important to keep excellent records – all the more so if some of the records are hard copy and others are electronic. Over the life of your company, you will be asked on any number of occasions to provide evidence of board approval of certain actions, whether in connection with the opening of an additional credit line, a seed round financing or on the eve of your initial public offering, when underwriters’ counsel really does want proof that the company was “duly incorporated” or evidence to support all those option grants over the years. Company counsel will also rely on these corporate records to back up a legal opinion or respond to due diligence requests from investors’ counsel or perhaps even from another company that is interested in acquiring your assets. Having up-to-date, clear, concise records of all board and stockholder actions will make those processes less painful. The alternative is disorganization and, potentially, increased expense in terms of legal fees if it becomes necessary to recreate a record of and ratify those past missing actions.

What are ‘minutes,’ and when are they produced?

At each board meeting, as well as any formal meetings of the stockholders, one individual will be designated secretary of the meeting who will be responsible for preparing written notes (aka minutes) memorializing the discussions by the board and setting forth those formal resolutions that were adopted at the meeting. These minutes will be reviewed and approved by the board at a subsequent meeting, signed by the secretary of the meeting and then placed in the “minute book.” Once shares are issued, certain actions will also require stockholder approval, and those approvals will also need to be documented and included in the minute book.

How do you maintain a minute book? 

A well-organized minute book might be divided into the following sections, each containing the documents listed and with an accompanying index:

1. Certificate of incorporation: A file-stamped copy of the certificate/articles of incorporation and all subsequent amendments as filed in the state of incorporation.
2. Bylaws: Your bylaws and all amendments.
3. Board of directors: 
   1. If initial directors are not identified in the certificate/articles/charter, an executed action by the sole incorporator appointing these individuals to serve on the board is typically prepared.
   2. An executed organizational consent or signed minutes of an organizational meeting in which the basic operations of the company are set forth.
   3. Minutes of all duly convened meetings (where a quorum is present, etc.) and signed by the secretary of the meeting.
   4. All written consents approving actions between meetings, executed by all board members (noting that any written action outside of a “live” meeting must be an action by unanimous written consent).
4. Stockholders: All actions by stockholders executed by the requisite majority or percentage of holders to authorize the actions detailed in the document.

In addition, for ease of reference, you might want to include a list of current officers and directors as well as any foreign qualification documents and the company’s tax ID and employer ID numbers.

Your lawyer can keep the original minute book materials on-hand, but many companies will also keep an electronic minute book, using a cloud-based service to store and share materials. If your company does that, you can use a file structure organized as described above.

If you get in the habits of papering meeting minutes promptly following a given meeting (and circulating them in a timely fashion for approval and signature), as well as keeping your corporate records up to date, the process of minute book maintenance should not be onerous.