Corporations should maintain accurate and thorough records of their actions. Proper record-keeping includes not only maintaining files, and chronicling contracts and other documents memorializing the day-to-day operations of the company, but also includes maintaining records required by the law of the state where the company is incorporated. For example, some states require corporations to keep records of stock ledgers, books of account, and minute books. All records maintained by the corporation in its regular course of business may be kept in any form or by any method, provided that the records can be converted into clearly legible paper form within a reasonable time. Under the law of some states, like Delaware, the corporation must provide paper copies of applicable records upon the request of any person, including stockholders in some circumstances, entitled to inspect such records under applicable law. If you decide to do recordkeeping in-house, here is a checklist of some things to be included in the corporation’s minute books and files:
- Minute books should contain the following documents, in the order listed:
- Certificate of Incorporation and all amendments thereto. Copies should be certified by the secretary of state of the state of Delaware or other applicable state authority
- Bylaws, including all current amendments and the dates of adoption, certified by the corporate secretary
- Minutes of all directors’ and stockholders’ meetings, and minutes of board committee meetings, signed by the corporate secretary or acting secretary of each meeting. If notice was given as required by the bylaws, the minutes should so state; if no notice was given, a waiver of notice must be signed by each director or stockholder not attending the meeting and filed with the minutes.
- Actions by unanimous written consent of directors or consent of stockholders (to be filed with the minutes, in chronological order)
- Stock ledger and journal
- Files should contain the following types of documents, in any convenient order:
- Certificate(s) of authority or other documents authorizing the corporation to do business outside its state of incorporation
- Duplicate original copies of all filings with regulatory authorities (e.g., the Securities and Exchange Commission, the Delaware Division of Corporations)
- Employment contracts
- Loan and other credit agreements
- Agreements of purchase or sale
- Investment management agreements
- Partnership agreements
- Tax returns and other tax filings
- Accounting books and records
Note: The above is an incomplete list and is intended to merely provide examples of the types of documents to be included in your files. Records-retention requirements will vary by category of document, and may be dictated by specific statutes and regulations affecting the corporation.
What exactly should we include in the board/stockholder minutes?
You are about to hold your corporation’s first board or stockholder meeting. The question may arise in your mind as to what exactly you should be jotting down for the corporation’s minutes recording this meeting. The minutes of directors’ and stockholders’ meetings should accurately reflect what actually occurred at the meeting. While minutes do not need to contain detailed descriptions of what each participant in a meeting said, the minutes should identify the issues before the respective groups and should state the result of the vote on each issue. Although this undoubtedly seems self-evident, the point is emphasized because of a persistent problem. From time to time, corporate records may contain an officer’s certificate setting forth the text of resolutions adopted at a board meeting on a given date; however, a review of the minutes for that date shows no record of such a resolution. Whenever an officer’s certificate is prepared, the corporate secretary should ensure that the resolutions referenced in the certificate were actually adopted as described. If a bank, corporation, or other institution requires the adoption of certain resolutions as a prerequisite to the closing of a loan or other transaction, and if a meeting of the board cannot be held within the necessary time frame, the resolutions can be adopted by unanimous written consent and their adoption so certified by a corporate officer.
The minutes, together with copies of the notice of the meetings or waivers thereof, should be placed in the corporation’s minute book. Detailed minutes do not validate corporate action, but minutes serve as a valuable record that action taken was properly considered and approved. If a corporation should for any reason become involved in litigation, proper minutes and other records can be indispensable evidence. The corporate secretary’s certified copy of the minutes is solid evidence that the action reported in the minutes was indeed taken; otherwise, such evidence can be extremely difficult to obtain.