If you are a corporate officer, then you may already know the importance of keeping company minutes. While states have different laws, most are in line with the federal Controlling Paperwork Burdens on the Public established under the Paperwork Reduction Act passed in 1980. Here are some reasons why you need to keep corporate minutes.
One of the primary reasons that you need to write down and record these items is for taxation purposes. That way, if you get audited by the Internal Revenue Service you can point them to your corporate minutes. Record retention guidelines suggest that you keep these minutes for at least three years unless you can find a written law that applies to your situation that says otherwise.
Another reason to keep corporate minutes is if disputes arise about what occurred. When questions arise, it is simple to pull out the corporate minutes and read them to answer any questions. While your company may want to institute other record retention guidelines, most corporations generally agree that three years is long enough to keep these records, including the experts at Information Requirements Clearinghouse.
Keeping corporate minutes may also help maintain your corporate status. In many states, a corporation cannot bring a lawsuit unless it is a corporation in good standing. Loss of corporate status may also impact the ability to raise funding. Corporations can lose their right to use their company name in a state where they are not in good standing. Some corporations have been totally dissolved by state governments when they are not in good standing. It can also open directors, shareholders, and officers to personal liability for actions taken by the corporation.
The minutes should include the date, time and place where the meeting occurred along with who was present. If someone came in late or left early, that should be recorded. A brief description of each agenda item should be listed. If voting occurred, then each vote needs to be recorded. The time that the meeting adjourned needs to be recorded. Corporate minutes do not become official until they have been approved by those in attendance.
A special emphasis should be placed on making sure to record any financial business that took place during the meeting. This might include the buying or selling of corporate assets, changes to stock option plans or pension plans, and any changes to official compensation plans.