A familiar sight in any office is that bookcase filled with minute books. It is a monument to how most companies have managed their corporate record keeping for years. But in today’s virtual working environment, many companies are reviewing how they track their information and update physical books they may not easily have access to.
Let’s look at standards in record keeping and maintaining minute books, and how the shift to virtual recordkeeping is evolving and presenting a better approach.
What sets the standards for corporate recordkeeping?
The Model Corporation Act (Chapters 16.01 and 16.02) outlines the basics of corporate recordkeeping. It addresses two categories: what records to keep and when and how records can be inspected.
Many states have fully adopted the Model Corporation Act while others have only partially adopted it. In some cases, states have written their own corporate statutes to include additional recommendations for tracking. These state statutes can be found in CT Advantage under the “Business Entity Resources” category (under “Law Summaries”). This is a quick way to reference your local statute as needed.
Other professional organizations may also suggest best practices for how long to retain corporate records. CT Corporation has compiled a sample listing below. As you can see, not all corporate documentation is required to be kept permanently.
What documents make up a minute book?
A minute book is comprised of a variety of documents. Anything that is driven by the entity should be captured in the minute book.
As a best practice, the minute book should hold all historic and current information about an entity. Any changes or updates should be noted. Minute books become the “map” an entity has followed during its time functioning as an entity and may be referred to in response to a variety of inquiries.
Typically, a minute book holds information that is requested during the due diligence process whether triggered by litigation, financing, audits, historical inquiry, transactions, and so on. Maintaining these records is important. If not, legal counsel would have to revisit and replicate past events, meetings, or changes — a challenging and time-consuming task.
Here are some examples of the documents that would be included:
- Articles/formation documents/amendments
- Bylaws
- Resolutions
- Shareholder ledger/share transfers
- Officer and Director lists with address
- Stock certificates
- Shareholders agreement
- All written communications to Shareholders for the past 3 years
- Meeting minutes
- Annual report filings
- Income tax returns/sales and use tax filings
As new changes occur, or meetings are held it is best to attach to your minute book physically or virtually — according to your preference. Absence of any of these records could expose the shareholders, members, or management to personal liability.
Although we don’t see the “Corporate Record Keeping Police” stopping by any offices in the U.S., certain international jurisdictions do require that minute books are kept in a specific location and ready for inspection at any time. Given this, be sure to review any international or Canadian record-keeping rules.